US Consumers Tap Out: Retail Sales End Weakest Year Since 2009 As Control Group Tumbles

Several days ago, Bank Of America was "confused" why retail spending refuses to pick up, although it hoped that this would be a one time aberation and that the official government data would disprove what it was seeing in its card data. Well, that did not happen after the headline retail sales printed moments ago at -0.1% in December, falling from an upward revised 0.4%.

As Bloomberg summarizes, sales at U.S. retailers declined in December to wrap the weakest year since 2009, raising concern about the momentum in consumer spending heading into 2016.

This is where Janet Yellen decided to hike:

The 0.1 percent drop matched the median forecast of 84 economists surveyed by Bloomberg and followed a 0.4 percent gain in November, Commerce Department figures showed Friday in Washington. For all of 2015, purchases climbed 2.1 percent, the smallest advance of the current economic expansion.

But BofA's confusion should at least be resolved when looking at the core data, which was a big disappointment, as the Retail Sales ex auto was down 0.1% in December, below the 0.2% expected. Putting this miss in context, 66 out of 69 economists thought December retail sales ex autos would've been higher than actual.

But the biggest disappointment was the GDP-feeding control group which tumbled by 0.3%, a mirror image of the expected increase of 0.3%, and down from the revised 0.5% in November.

And just like that US retail sales put the wrap on the weakest year since 2009 as the manufacturing recession is now officially starting to spread to the service sector.

“It’s a disappointing finish, especially in light of the low oil prices,” Thomas Costerg, a senior U.S. economist at Standard Chartered Bank in New York, said before the report. “We need better wage growth.”

But that would mean hiring less minimum wage, part-time workers, which in turn would mean a sharp collapse in the only thing that the US economy "has going" for it.

So much for those "gas savings" prompting Americans to spend, spend, spend...

More details from the WSJ:

December’s sales slump was broad-based, as consumers spent less on general merchandise, clothing and accessories, groceries and gasoline.

 

Excluding motor vehicles, sales were down 0.1% in December, and excluding gasoline, sales were unchanged. Excluding both categories, sales were still flat last month.

 

Consumer spending is a key driver of the U.S. economy, representing more than two-thirds of economic output. Household consumption has helped the economy grow in recent quarters despite a stronger dollar and weak demand overseas, which have weighed on U.S. exporters.

 

Retail sales data, which are a key gauge for overall consumer spending, can be volatile from month to month. Sales growth has decelerated over the past year, reflecting declines in sales on gasoline, electronics and appliances, and department stores. Overall sales were up just 2.1%, a marked slowdown from the previous year’s 3.9% annual gain.

 

Slumping oil prices have also held down the sales figure over the past year, as consumers spent less at gas stations thanks to lower gasoline prices. In December, sales at gas stations fell 1.1%, and were down 19.4% from a year earlier.

 

Friday’s report also showed consumers stepped up spending at furniture stores, building supply and garden centers, bars and restaurants and online retailers.

 

Other recent data has suggested Americans may be starting to open their wallets as their incomes continue to pick up.

The slowdown, including electronics stores, clothing merchants and grocers, indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season.  The full table breakdown shows the widespread damage across every category: