Analysts had visions of sugar plums dancing in their heads for December retail sales. Instead, they got a lump of coal.
The Census Bureau said Tuesday that retail sales were flat in December, well short of the consensus forecast for a 0.4 percent gain. That was a pretty serious retreat after the solid 0.6 percent increase in November.
There are two competing narratives explaining this. Optimists say that holiday demand just showed up earlier than expected, and so consumers did not have as much leftover on their shopping lists in December. The pessimists say it looks like consumers just ran out of steam, an impression bolstered by the very poor reading for consumer sentiment from the University of Michigan in December.
But were the numbers really so bad? The headline figures for month-to-month changes in retail sales are seasonally adjusted. In December, the seasonal adjustments are always enormous, and this year’s were truly huge.
On an unadjusted basis, total retail and food service sales jumped 10.9 percent from November to December, stronger than the 8.8 percent gain in the same period a year earlier. December was up 3.8 percent year over year on an unadjusted basis, with October up 3.5 percent and November up 1.9 percent.
Of course, the figures get seasonally adjusted for a reason. Shopping always explodes in December. This year it just didn’t boom as much as the number crunchers at the Census Bureau thought it should.
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