Is a December Decline in Retail Sales a Pattern?

There’s an old wisecrack that once is happenstance, twice is coincidence, and three times is a pattern. At the Wall Street Journal Harriet Torry reports that U. S. retail sales declined 1.1% in December:

Retail sales, a measure of purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. That was the biggest monthly decline in a year and marked the second consecutive month of falling sales. November retail sales were revised lower, to a 1% decline, marking a soft close to the holiday shopping season.

The decline in retail spending late last year adds to signs that the U.S. economy is slowing. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months.

The economy is cooling as the Federal Reserve pushes up interest rates to combat inflation. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.

“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said Joseph Brusuelas, chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added.

However, there’s another possibility. Retail sales declined in December 2021, too:

but not in 2020.

1.1% if a pretty big decrease, considerably bigger than in 2021. I hope it’s not a pattern. It might be the “new normal”. How significant is this? The U. S. economy is highly dependent on retail sales. Too dependent in my opinion but that’s a separate issue.