Retail Sales Unexpectedly Crashed in December

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U.S. retail sales declined sharply in December, as holiday shoppers stayed away amid surging coronavirus infections and the aftermath of Joe Biden’s presidential victory.

Excluding car and gasoline sales, retail sales fell 2.1 percent in the final month of 2020, data from the Commerce Department showed Friday. The prior month’s figure was revised down to show a 1.8 percent decline from the initial estimate of 0.8 percent, which means December was a bigger decline from a lower starting point.

The size of the downturn in sales caught economists by surprise. The consensus estimate was for just a 3-tenths of a percentage point decline.

Overall retail sales also declined by more than expected. These fell 0.7 percent for the month, worse than the flat to one-tenth of a point decline forecast. The prior month was revised down from a drop of 1.1 percent to a 1.4 percent decline.

Excluding vehicles but including gas, sales fell 1.4 percent, below the one-tenth expected decline. The prior month was revised down from of 0.9 percent decline to a 1.3 percent contraction.

Sales in the so-called “control group”—which excludes sales at auto dealers, building-materials retailers, gas stations, office supply stores, mobile homes, and tobacco stores—fell 2 percent, worse than the 0.2 percent decline expected. Many economists and investors consider the control group figure a more precise measure of consumer spending. This figure is a component of the personal consumption expenditure gauge used to calculate GDP.