No Holiday Miracle, as Retail Sales Fall Again
- Retail sales fell for the third consecutive month in December but were up slightly year over year
- Online and nonstore retailers (like direct-to-consumer brands) dropped the most
- Overall, 2020 retail sales were about the same as 2019, despite the massive drop in spending early in the pandemic
Not even the holiday season could help retail in the U.S. shake the effects of the pandemic, with sales numbers falling for the third consecutive month. In previous years, retail sales have often risen from October to December.
Friday’s advance estimate from the Census Bureau shows $540.9 billion in retail and food services sales last month, a 0.7% decrease from November. December’s sales numbers fell short of expectations, with consensus expectations of a 0.1% decrease, according to an analysis by Econoday.
The Census Bureau also revised the November sales figure down, saying it fell to 1.4% from the advance estimate of 1.1%.
December was the third straight month retail sales fell month-to-month, after posting positive numbers throughout the summer. However, six of the 13 major categories posted month-to-month gains in December, compared to just two in November.
Falling month-to-month numbers are a symptom of surging COVID-19 case numbers and a deterioration in the labor market, said Katherine Judge, an economist with CIBC Capital Markets, in a commentary. She added that the new federal stimulus package should prop up spending on goods, even if service sectors continue to struggle.
Online and other nonstore retailers saw the largest drop in December, with sales falling 5.8%. Despite the decrease, online sales still were up 19.2% when compared with December 2019. Sporting goods and hobby stores (15.2%) and building material and garden stores (17%) also posted double-digit growth when compared to the previous December.
Sales at food services and drinking places—among the businesses hardest hit by the pandemic and its related restrictions—fell 4.5% between November and December, and were down 21.2% from 2019. Grocery stores, meanwhile, were down 1.7% from November, but up 7.9% compared to December 2019.
Gasoline stations—while down 12.1% compared to last year—increased month-to-month sales by 6.6%. The cost of gasoline also shot up last month, according to Wednesday’s Consumer Price Index data, with an 8.4% increase in prices that drove an overall gain in consumer prices.
Clothing and accessory stores grew sales by 2.4% from November, but were down 16% year over year. Sales at department stores continued to be weak, falling 3.8% last month and 21.4% when compared to December 2019.
Motor vehicle and parts dealers saw a 1.9% increase in sales last month, increasing gains in 2020 to 10.1% as consumers moved away from public and mass transit. Electronics and appliance stores fell 4.9% in December, and annual numbers were down 16.6% compared to 2019.
Total sales for the 12 months of 2020 actually were up 0.6% from 2019, and December 2020 posted a 2.9% increase when compared to December 2019. Total sales for the fourth quarter of 2020 increased 4% from the same period the year prior.
The U.S. Census Bureau mails a survey to 5,500 employer firms across the country each month. The resulting data provides an early estimate of monthly sales for each category of retail and food service firms located in the United States. With consumer spending accounting for more than two-thirds of the economy, the monthly retail sales data can give an indicator of where the economy is headed.