Americans probably brought the holiday spirit in abundance to retailers last month, marking a strong finish to 2017.
Receipts climbed another solid 0.5% in December after a 0.8% jump a month earlier that reflected broad-based gains, according to the median projection in a Bloomberg survey of economists before Jan. 12’s release from the Commerce Department. Compared with a year earlier, sales in November were up 5.8%, the most since March 2012.
“Retail analysts will watch to see if favorable economic news, solid readings on consumer confidence/sentiment and public enthusiasm for the passage of the tax-reform bill are having a substantive impact on consumer buying patterns -- discretionary spending in particular.”-- Carl Riccadonna and Yelena Shulyatyeva, Bloomberg Economics
The government’s data on Jan. 12 are preceded by weekly indicators that have shown sturdy holiday-consumption patterns at merchants. The Retail Economist-Goldman Sachs index of retail sales advanced 3.3% in the week ended Dec. 23 compared with the same period a year earlier. Separate figures from Johnson Redbook showed a 5.7% increase that same week, the most since July 2014.
“2017 holiday sales on a seasonally-adjusted basis from the last week of October through the final week before Christmas posted their strongest growth since the 2012 holiday season, based on the TRE-GS weekly index,” Michael Niemira, chief economist of The Retail Economist LLC, said in a Dec. 27 statement.
Elevated household confidence and hiring are putting a spring in consumers’ steps. Nonetheless, while the economy continues to be underpinned by steady consumer outlays, paychecks aren’t stretching very far. That could explain a recent pickup in credit-card balances as reported by the Federal Reserve.
In November, revolving debt posted the largest gain in a year, suggesting a good part of the jump in retail sales during the month was financed. The risk to the economy this quarter is that households, many of whom face higher home-heating bills, will temper their spending as they work off their credit-card balances.
By Vince Golle