Retail Sales Plummet As Inflation, COVID-19 Concerns Rise
U.S. retail sales decreased by 1.9% in December 2021 as inflation and Omicron coronavirus variant cases soared, marking a sharp end to the holiday shopping season.
Although retail sales saw a 0.2% increase in November 2021, they faced a 1.9% decrease in the final month of the year, the U.S. Census Bureau announced Friday. December’s retail spending plummeted 16.9% compared to December 2020.
Sales were down across most categories, with online sales dropping the most — 8.7%, according to the Census Bureau. Electronic sales dipped by 2.9%, while furniture and home store sales decreased by 5.5% on a year-over-year basis.
“Consumer spending will remain the cornerstone of economic growth this year, but the near-term path will be choppy amid surging Omicron cases,” Lydia Boussour, the lead U.S. Economist and Oxford Economics, said in a statement obtained by the Daily Caller News Foundation.
“Overall, the combination of strong labor income growth, elevated excess savings, and healthy balance sheets will support above-trend consumption growth this year,” Boussour said.
Annual retail growth soared in 2021 soared, with total sales up 19.3% compared to 2020, according to the Census Bureau.
Retail businesses shouldn’t expect to see such high spending in 2022, though, experts told The Wall Street Journal. Consumer savings have started to come down from their peak levels while the newest coronavirus variant keeps people out of restaurants and bars.
“In any normal year you don’t see sales go up by this much,” Neil Saunders, managing director of GlobalData Retail, told the WSJ, referring to 2021’s strong performance.
Meanwhile, inflation continues to soar across the country, and the labor market continues to tighten.
The Consumer Price Index, the key inflation indicator, grew to 7% in December on a year-over-year basis, the highest level in four decades, the Bureau of Labor Statistics announced Wednesday. Also, the Producer Price Index, a measurement of inflation at the wholesale level, soared to 9.7% on a year-over-year basis in December, the highest level since the index was created.
Even more, the U.S. economy added only 199,000 jobs in December, a figure well below what economists anticipated and one of the weakest reports since President Joe Biden took office. Unemployment, however, dipped to 3.9% from November’s 4.1% figure.
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