MacroScope

The holiday shopping season that wasn’t

January 14, 2009

We knew U.S. consumers were retrenching, but today’s December retail sales figures from the Commerce Department show that households were cutting back even more than economists had thought. That suggests no end in sight for a U.S. recession already in its second year.

The headline number was bad enough, down 2.7 percent, which was more than double the decline that economists polled by Reuters had predicted. A lot of that had to do with the well-documented problems with U.S. auto makers, as well as falling oil prices which pushed down sales at gasoline stations.

But even if you strip out autos and gasoline, retail sales were down 1.5 percent last month, the biggest drop since September 2001 — a month when many Americans stayed away from shopping centers for fear of attack in the days after September 11.

“There were 1 percent-plus declines in most (retail) sectors, confirming that the holiday season was truly disastrous,” says Ian Shepherdson, chief U.S. economist at High Frequency Economics. “Surely the first quarter can’t be as bad?”

Reuters photo by Brian Snyder

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