US Retail Sales: Despite December’s decline, outlook still positive – Wells Fargo
|Data released on Friday surprised to the downside with a 1.9% slide in December Retail Sales. Analysts at Wells Fargo point out the decline was broad-based. They see cratering in retail sales more as a reflection of early shopping and pulled-forward demand than an Omicron impact or a seminal change in consumer activity.
Key Quotes:
“Retail sales dropped 1.9% in December, the largest monthly decline since February; stripping away spending on autos and gas only makes it worse with a 2.5% decline. Those looking for confirmation of an Omicron-related slowdown will seize upon today's drop in retail sales as evidence, but this is a decline we have been anticipating since our first holiday sales forecast in September. We warned then about a year-end air-pocket and compared the struggle for retailers to holding an early lead in a football game. It is clear that most shoppers heeded the advice to get holiday shopping done early and that, combined with a massive surge in goods spending earlier in the year, conspired to pull sales sharply lower to end the year.”
“Even with the plunge in sales in December, holiday sales still posted a record annual increase. Sales in November and December came in 12.9% ahead of last year's level and ahead of our forecast which called for an 11% gain in sales.”
“We still believe consumers continue to become desensitized to rising case counts with each passing wave of the virus. This is particularly true today with the growing evidence that this variant is causing less severe illness. Inflation thus appears to be the larger concern for consumers who are seeing income gains struggling to keep up with rising prices. Weak income growth in January due to dwindling stimulus may also weigh on consumer psyche during the month.”
“While December's sales print makes tough comparisons for the start of the year, we remain confident consumers will see above-trend growth this year.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.