US Retail Sales Flat In December As Consumers Pull Back

US retail sales were unchanged in December at about 735 billion dollars, missing forecasts for roughly 0.4% growth and marking a sharp slowdown from November’s 0.6% gain. The flat headline number suggests consumers pulled back at the end of the holiday season, reinforcing concerns that the main engine of the US economy is losing some momentum.

What the report showed

• Month over month, total retail sales were flat (0.0%) in December, versus expectations for a solid increase.

• Year over year, sales were still up around 2.4%, but that pace is modest after adjusting for inflation.

• Of 13 major retail categories, a majority saw declines, including autos, furniture, electronics, clothing, and restaurants/bars.

• Autos fell about 0.2%, furniture about 0.9%, electronics roughly 0.4%, and restaurant and bar sales dipped 0.1% from November.

• Some categories held up or rose, including building materials, sporting goods, and online sales, which eked out a small gain.

Why consumers are pulling back

• Higher prices linked in part to tariffs on imports have kept the cost of goods elevated, pressuring household budgets.

• Wage growth has slowed, with annual pay increases running at their weakest pace in several years.​

• Households have been funding spending by saving less; the savings rate has fallen to a low single-digit level compared with the pandemic peak.

• Consumer confidence has dropped to its lowest level in many years, and survey data show people are increasingly cautious about big-ticket purchases.

• Economists describe a K-shaped pattern: higher‑income households, supported by strong stock and housing markets, are still spending, while lower‑income households are struggling with slower wage gains and higher living costs.

What it means for the economy and markets

• Consumer spending drives more than two‑thirds of US GDP, so weaker retail numbers raise the risk that overall growth cools in early 2026.

• Downward revisions to prior months’ sales suggest the late‑2025 consumer strength was less robust than first reported, prompting some economists to trim fourth‑quarter GDP estimates.

• Analysts are debating whether December’s weakness is a one‑off (holiday timing, seasonal quirks, weather) or an early sign of a more persistent slowdown as savings buffers thin and the labor market softens.

• Some forecasters think upcoming tax refunds and policy stimulus could give spending a boost later in the first quarter, partially offsetting December’s softness.

Quick takeaway for you

• If you’re a consumer, this environment rewards stronger balance sheets: paying down high‑rate debt and rebuilding some savings gives more room if growth slows further.

• If you’re an investor, flat December sales fit a narrative of a maturing cycle: value, quality, and defensive sectors can sometimes fare better when consumer momentum starts to fade, while highly discretionary retailers may see more volatility.