January 18, 2023
The impact of a year of very aggressive central bank tightening and quantitative tightening are starting to bite the economy and they’re biting hard.
Chief investment officer at JPMorgan Asset Management, Bob Michele. Retail sales decreased by 1.1% in December, indicating a weaker than expected holiday shopping season. Decreased spending on big-ticket items, like furniture and cars, contributed to weaker numbers, as did lowering gas prices.
Background: The U.S. Census Bureau releases a retail sales report each month that paints a picture of how consumers are spending their money, such as on dining out, gifts, and big-ticket purchases. December is typically a strong month for retail sales but 2022 showed weaker figures.
Why It Matters: The retail sales report for December shows that 10 of 13 retail categories experienced decreased spending. Compared to the rest of the year, where there was higher consumer spending due to strong labor market and built up demand post-pandemic, there was a late-year cooling in consumer spending. Looking ahead, economists expect a "softer 2023 for consumer spending, and therefore growth," according to Bloomberg.
Something to Consider: “Consumers have shown incredible resolve in the face of higher inflation and rising borrowing costs in 2022, but there are hints that may be changing,” Wells Fargo economist Sam Bullard says. He highlighted recent decline in purchases of interest-rate sensitive items, such as furniture sales and vehicles. These items are decreasingly bought as borrowing costs increase.
The report (U.S. Census Bureau)
US Retail Sales Slide by Most in a Year in Broad-Based Decline (Bloomberg)
U.S. Retail Sales Fell 1.1% in December (The Wall Street Journal)
by Jenna Lee,
