Retail Sales Unexpectedly Flop In December, Down 1.9 Percent

Advance Retail Sales Month-Over-Month 2021-12

Unexpected Flop 

The Bloomberg Econoday consensus was for December retail sales to be flat from November, in a range of -0.6% to +0.7%.

Economists missed the mark by a mile as the Census Data shows sales fell 1.9%.

Adding insult to injury, the Census Department revised November to the downside.

Negative Revisions to November

  • Total retail sales went from +0.3% to +0.2%. 
  • Excluding vehicles, sales went from +0.3% to +0.1% 
  • Excluding vehicles and gas, sales went negative in November as well, from +0.2% to -0.1%.

Advance Sales 

Advance estimates of U.S. retail and food services sales for December 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $626.8 billion, a decrease of 1.9 percent from the previous month, but 16.9 percent above December 2020. 

Total sales for the 12 months of 2021 were up 19.3 percent from 2020. 

It's not how the year went that matters, but rather where we are headed. The economy is slowing just as the Fed is about to hike.

Advance Retail Sales Detail 

Advance Retail Sales - Detail 2021-12

The above chart clearly shows three rounds of fiscal stimulus, one under Trump in April of 2020 and two under Biden early in 2021.

Those stimulus checks padded spending but the stimulus has now worn off. Holiday sales were a flop, even nonstore retailers, down 8.7% in December.

 That category includes Amazon. 

Fed is Always Late

The Fed is always late to hike, blows bubbles in the process, then chases its own tail. 

Tale rather than tail is arguably more accurate. The Fed believes what it wants to believe rather than the data at hand. 

How Many Rate Hike Are Coming?

Dot Plot of Expected Rate Hikes December 2021

The above chart shows Fed rate hike projections looking ahead. 

Previous dot plot projections pre-pandemic shows one participant predicted a 4.75% Fed Funds rate for 2020!

On December 15, 2021 I penned The Fed Expects 6 Rate Hikes By End of 2023 - I Don't and You Shouldn't Either

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