The numbers: Sales at U.S. retailers fell in December for the third month in a row as the record deluge of coronavirus cases opened fresh wounds in the economy.
Retail sales dropped 0.7 % last month, the government said Friday, Economists polled by Dow Jones and The Wall Street Journal has forecast a 0.1% decline.
If auto dealers and gasoline stations are excluded, retail sales sank a sharper 2.1% in December. Auto and gas purchases often swing up and down and can mask underlying trends in retail sales.
Read: The U.S. lost 140,000 jobs in December. How bad was it?
What happened: Sales fell sharply at Internet retailers, bars and restaurants and electronic stores, accounting for most of the decline last month.
Internet retailers posted a surprising 5.8% decline in sales. They’ve been one of the standout performers during the pandemic. Sales are still up 19% from a year earlier, however.
Bars and restaurants also suffered a 4.5% drop in sales, marking the third decline in a row. They are among the businesses that bore the brunt of new government restrictions after the record coronavirus outbreak. Customers were also more wary of going out for fear of catching the virus.
Sales also slid nearly 5% at big-box stores such as Best Buy
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Those declines more than offset a nearly 2% increase in sales at auto dealers.
Sales also increased 6.6% at gas stations mostly due to higher prices, but higher energy prices don’t help consumers or the economy.
The sales decline in November, meanwhile, was revised to 1.4% from an initial 1.1%.
Read: Jobless claims surge to 5-month high of 965,000
Big picture: The spate of weakness in retail sales toward the end of 2020 underscores the ongoing drag from the coronavirus. Consumer spending accounts for 70% of U.S. economic activity and retail sales is one-third of that.
The rollout of vaccines and promise of more financial help from the incoming Biden administration will help. The president-elect is reportedly going to offer up to $2 trillion in additional spending to boost the economy.
Yet retail sales and broader U.S. economic growth are likely to be uneven until the pandemic fades.
What they are saying? “This is a weak handoff for 2021,” said senior economist Jennifer Lee of BMO Capital Markets.
“President-elect Biden’s proposed fiscal stimulus will get pushback, no question,” she added. “But the latest reports on payroll cuts, [pjobless claims], and now, far weaker than expected retail spending, will give the package a stronger voice.”
Market reaction: The Dow Jones Industrial Average
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