The latest data from the Commerce Department reveals that Americans continued their robust spending habits in December, marking a positive end to both the holiday shopping season and the overall year. The report, released on Wednesday, indicates a 0.6% acceleration in retail sales compared to November’s 0.3% increase. With consumer spending contributing to nearly 70% of the U.S. economy, this upbeat performance suggests that people maintain confidence and are willing to sustain their spending habits.
Noteworthy increases were observed across various retail sectors. General merchandise stores reported a significant rise of 1.3%, while sellers of clothing and accessories, as well as online retailers, both experienced a 1.5% increase. However, the furniture and home furnishings sector faced a decline of 1%, reflecting challenges in the housing market. Sales at restaurants remained unchanged in December.
Contrary to expectations, economists anticipated a slowdown in consumer spending during the final quarter of the year due to factors such as credit card debt, delinquencies, and reduced savings. Despite these challenges, along with higher borrowing costs, tighter credit conditions, and price increases, household spending has proven resilient. The strong job market and rising wages appear to be key factors fueling this sustained level of consumer spending.
As the economy navigates various headwinds, including the struggling housing market, the December retail sales report signals a positive outlook for economic growth in the coming year. Consumer confidence and spending habits continue to play a pivotal role in supporting the overall health of the U.S. economy.