(Photo: REUTERS)
Despite the falling gas prices, a gauge of U.S. consumer spending unexpectedly fell in December fueled by weakening demand across the board.
The Commerce Department said on Wednesday retail sales — excluding automobiles, gasoline, building materials and food services — fell 0.4 percent last month after a 0.6 percent rise in November.
The so-called core retail sales, which excludes pretty much everything everyday Americans are concerned with, foreshadow the consumer spending component of gross domestic product.
Economists polled by Reuters had expected core retail sales to rise 0.4 percent last month.
December’s unexpected decline should reduce optimistic expectations on consumer spending, which accounts for more than two-thirds of U.S. economic activity, and overall gross domestic product (GDP) growth. GDP accelerated sharply in the fourth quarter.
With gasoline prices continuing to fall — thanks to a 61 percent increase in U.S. production on private lands, despite a 6 percent reduction on public lands — December’s decline in core retail sales will hopefully pick up spending and sentiment.
Core sales last month suffered from a 1.6 percent decline in receipts at electronic and appliance stores, a 0.3 percent fall in sales at clothing stores, a 03 percent drop in online sales, and further declines in receipts at sporting goods stores.
On a more positive note, core sales were up 3.2 percent from a year earlier, and receipts at furniture stores rose 0.8 percent in December.
As a result of falling gasoline prices, service station sales fell by 6.5 percent, which is the biggest decline since December 2008. When combined with a 0.7 percent fall in receipts at auto dealerships, overall retail sales fell by 0.9 percent, which the largest decline since January of last year.
Consequently, a new survey from Rasmussen Reports, which was recently examined at PPD, found car-buying isn’t on the top of Americans’ to-do lists.
Meanwhile, November retail sales were revised down to a 0.4 percent increase, rather than the previously reported 0.7 percent increase.
Sales for building materials and garden equipment also fell by 1.9 percent in December, while sales at restaurants and bars actually ticked up 0.8 percent.
