A shopper looks at outerwear at a store in Schaumburg, Ill., Monday, Dec. 18, 2023. On Wednesday, the Commerce Department releases U.S. retail sales data for December. (AP Photo/Nam Y. Huh)
Americans stepped up their spending even more than expected in December, closing out the holiday season and the year on an upbeat tone.
Retail sales rose 0.6% in December compared with November's 0.3% increase, according to the Commerce Department's report issued Wednesday. Consumer spending accounts for two-thirds of the economy so the report signaled that shoppers may be able to keep fueling economic growth this year.
Sales at stores selling general merchandise rose 1.3%, while sellers of clothing and accessories saw business up 1.5%. Online sellers posted a 1.5% uptick. Furniture and home furnishings businesses had a 1% decline, reflecting a challenging housing market. Sales at restaurants were unchanged in December.
Economists had expected consumers to pull back on spending in the final three months of the year as credit card debt and delinquencies rise and savings fall. While consumers continue to face higher borrowing costs, tighter credit conditions and higher prices, spending is being fueled by a strong job market and rising wages.
Inflation has cooled significantly since peaking at 9.1% in mid-2022, but costs can still flare. Higher energy and housing prices boosted overall U.S. inflation in December, a sign that the Federal Reserve’s drive to slow inflation to its 2% target will likely remain a bumpy one.
“The U.S consumer continues to hold up well, which is a positive for the economy,” said Larry Tentarelli, chief technical strategist at Blue Chip Daily Trend Report. But he said the stronger data does lessen the chances that the Federal Reserve will cut rates.
Meanwhile, polls show many Americans are still pessimistic.
Yet the holiday shopping season, the most critical for retailers, has turned out to be a decent one, according to some recent data.
Holiday sales from the beginning of November through Christmas Eve climbed 3.1%, according to Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards.
While that’s less than half the 7.6% increase from a year earlier, this year’s sales are more in line with what is typical during the holiday season.
The National Retail Federation, the nation’s largest retail trade group, is expecting holiday sales to be up between 3% to 4% in November and December compared with the year-earlier period.
Ted Rossman, senior industry analyst at Bankrate.com, noted that consumer spending was “remarkably strong” during the holidays, but he added, “I do worry, however, how people are paying for all of this stuff. ”
Rossman noted that credit card balances and rates were already at record highs even before the holiday splurge. And buy now, pay later plans— which let shoppers break up the cost of an item over time — have spiked from last holiday season.
The government’s monthly retail sales report offers only a partial look at consumer spending; it doesn’t include many services, including health care, travel and hotel lodging.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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