Economists and the retail industry expected holiday shopping sales would be exceptionally strong for reasons that were never entirely clear, but they were apparently wrong.
Data just released by the Commerce Department shows that retails sales fell in December by the largest amount in almost 10 years and sales for November were also revised slightly downward.
WASHINGTON (Reuters) - U.S. retail sales recorded their biggest drop in more than nine years in December as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018. [...]
The Commerce Department said retail sales tumbled 1.2 percent, the largest decline since September 2009 when the economy was emerging from recession. Data for November was revised slightly down to show retail sales edging up 0.1 percent instead of gaining 0.2 percent as previously reported.
The plunge in retail sales came amid a sharp stock market sell-off and drop in consumer confidence in December. The longest government shutdown could also have undercut sales.
Speaking of government shutdowns, the release of this report on weak holiday shopping sales was reportedly delayed by the 35-day shutdown engineered by Trump. A January sales report that includes nearly the full duration of the government shutdown is scheduled to be released tomorrow.
Now, in related news, estimates for economic growth are also being revised downward.
The Federal Reserve of Atlanta has revised fourth quarter projections downward by 1.2 percent and others are expected to follow.
The U.S. economy's estimated growth rate in the fourth quarter was slashed to 1.5% from 2.7% by the Atlanta Federal Reserve after declines in retail sales and inventories. The Atlanta Fed was not alone - many Wall Street firms also cut their estimates for gross domestic product after the government reported a 1.2% drop in retail sales in December. The decline was the biggest in nine years. Business inventories also fell in November, adding to the drag on fourth-quarter GDP.
Keep in mind -- Trump and the GOP said their tax cuts would deliver permanent 4 percent growth. Growth for all of 2019 could end up being 2 percent or less.