Is the US Consumer Finally Slowing Down? Flat Retail Sales Raise Fresh Growth Fears
Source: Kapitales Research
Highlights:
US retail sales were unchanged in December, missing expectations for a 0.4% increase, at the time of writing, signalling a slowdown in consumer spending momentum.
Spending weakened across several categories, with auto, furniture, electronics and clothing sales declining, while October retail sales were also revised lower, adding to growth concerns.
Economists warned that higher living costs, tariffs and a softer labour market are weighing on households, raising the risk of slower US economic growth in the near term.
US consumer momentum may be losing steam, after new data showed retail spending stalled unexpectedly at the end of the year, raising concerns about economic growth heading into the new quarter.
Retail Sales Miss Expectations
According to figures released by the US Commerce Department, US retail sales were unchanged in December, defying expectations for a modest increase. At the time of writing, economists had been forecasting a 0.4% rise, following an unrevised 0.6% gain in November. The data showed households pulling back on big-ticket purchases, particularly motor vehicles, furniture, electronics and clothing. Receipts at auto dealerships slipped 0.2%, while furniture and home store sales fell 0.9%, pointing to growing caution among consumers.
Downward Revisions Add to Concerns
Adding to the softness, retail sales for October were revised lower, now showing a 0.2% decline instead of the previously reported 0.1% fall. While December sales were still 2.4% higher year-on-year at the time of writing, economists said the trend suggests mounting pressure from higher living costs and slowing income growth. The weaker retail report, combined with a modest rise in business inventories, prompted several economists to downgrade their fourth-quarter GDP growth forecasts.
Tariffs, Weather and Consumer Fatigue
Analysts pointed to a mix of factors weighing on spending, including higher prices linked to import tariffs, a cooling labour market and unusually cold January weather that could further dampen activity.
Thomas Ryan, North America economist at Capital Economics, said earlier signs of consumer resilience appear to be fading, in line with weak sentiment indicators and a falling savings rate.
Can Tax Cuts Provide Relief?
Some economists expect spending to stabilise later in the quarter as larger tax refunds linked to Donald Trump’s tax cuts begin to flow. However, others caution that households may choose to save rather than spend, given lingering economic uncertainty.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
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Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
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Is the US Consumer Finally Slowing Down? Flat Retail Sales Raise Fresh Growth Fears
Highlights:
US consumer momentum may be losing steam, after new data showed retail spending stalled unexpectedly at the end of the year, raising concerns about economic growth heading into the new quarter.
Retail Sales Miss Expectations
According to figures released by the US Commerce Department, US retail sales were unchanged in December, defying expectations for a modest increase. At the time of writing, economists had been forecasting a 0.4% rise, following an unrevised 0.6% gain in November. The data showed households pulling back on big-ticket purchases, particularly motor vehicles, furniture, electronics and clothing. Receipts at auto dealerships slipped 0.2%, while furniture and home store sales fell 0.9%, pointing to growing caution among consumers.
Downward Revisions Add to Concerns
Adding to the softness, retail sales for October were revised lower, now showing a 0.2% decline instead of the previously reported 0.1% fall. While December sales were still 2.4% higher year-on-year at the time of writing, economists said the trend suggests mounting pressure from higher living costs and slowing income growth. The weaker retail report, combined with a modest rise in business inventories, prompted several economists to downgrade their fourth-quarter GDP growth forecasts.
Tariffs, Weather and Consumer Fatigue
Analysts pointed to a mix of factors weighing on spending, including higher prices linked to import tariffs, a cooling labour market and unusually cold January weather that could further dampen activity.
Thomas Ryan, North America economist at Capital Economics, said earlier signs of consumer resilience appear to be fading, in line with weak sentiment indicators and a falling savings rate.
Can Tax Cuts Provide Relief?
Some economists expect spending to stabilise later in the quarter as larger tax refunds linked to Donald Trump’s tax cuts begin to flow. However, others caution that households may choose to save rather than spend, given lingering economic uncertainty.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au