Consumer Spending and Retail

The Commerce Department reported that U.S. retail sales were flat in December compared with November, defying economists’ expectations for a 0.4 percent gain and ending the holiday season on a weak note after a 0.6 percent jump the prior month. The data, delayed by a 43‑day government shutdown, show softness across several categories including furniture, home furnishings, and electronics and appliances, with modest gains only at building materials and garden stores, gas stations, and food and beverage outlets; restaurant sales slipped 0.1 percent. The December pause follows a choppy second half of the year, with sales down 0.1 percent in October, up 0.1 percent in September, and stronger gains in June through August, and comes amid sharply deteriorating consumer confidence that recently hit its lowest level since 2014. Analysts quoted in the piece say the numbers suggest consumer spending is finally catching up to months of sour sentiment, though some still expect tax‑refund‑driven strength later in the first quarter. The report lands in a broader "confusing" economic backdrop where GDP growth has been robust but monthly job gains have slowed dramatically from the post‑pandemic boom, and it will feed into market and Fed expectations as more jobs and inflation data arrive this week.