While Bank of America had warned investors to brace for a dismal retail spending print in January, expectations remained positive (albeit just a 0.1% MoM move) for December's (delayed due to shutdown) official spending data today. As a reminder, on Tuesday we reported that retail sales ex-autos, as measured by the aggregated BAC credit and debit card data, tumbled 0.3% month-over-month seasonally adjusted in January - the biggest drop in three years. This followed a flat reading in retail sales ex-autos in December.
Turning to the January BAC internal data, in January, spending for 4 out of 14 sectors increased in the month, showing broad-based weakening.
As a reminder, Retail Sales for the Control Group soared in November (+0.9% MoM) so some slowdown was expected; but, the government's official retail spending data for December confirmed BofA's concerns and plunged...
- Headline Retail Sales -1.2% MoM (+0.1% MoM exp)
- Control Group Retail Sales -1.7% MoM (+0.4% MoM exp)
That is the biggest MoM drop in retail sales since 2009 for the headline and the biggest drop in the control group since the 9/11 attacks in 2001!...
Which sent the Year-over-year retail sales data reeling...
“These numbers are horrible,” said Ward McCarthy, chief financial economist at Jefferies LLC.
“It appears to contrast quite sharply with reports of Christmastime sales that were generally seen as quite healthy,” and for the Fed, “rate normalization is on the back burner for a long time to come.”
This is the worst December retail sales print since 2008 (and 2nd worst in history)...
The disaster was broad-based...
But most notably, December online internet sales (non-store retailers) tumbled 3.9% MoM - the biggest drop ever
(oddly with Amazon claiming record holiday sales for the same month).
Needless to say, this will be a disaster for Q4 GDP forecasts which we now expect to print in the low 1% range.
BofA remains pessimistic:
"While there are a number of special factors that skew the data, the softening of late has revealed the weakest trend for consumer spending since mid-2016."
And finally, we guarantee the words "pent up demand" will be uttered today on CNBC as the latest excuse for why the US consumer is crushed.