No, December's Retail Sales Didn't "Fall"... At Least Not How You Think

The headlines certainly look dire. The Wall Street Journal's "Retail Sales Declined in December as Fastest Pace Since 2009" not only leaves nothing to the imagination, it paints a grim picture of what may lie ahead.

The only problem is, the message is misleading at best, and outright false at worst, proving most of the media will stop at nothing to whip up some fear. After all, the only thing that sells newspapers - or clicks, these days - better than greed is fear.

Reality: Retail spending fell two months ago... down 1.2% compared to November's tally. But, retail spending in December of last year was actually 1.9% better than it was in December of 2017, which is a much more meaningful comparison. Factoring in less sensitive goods like construction supplies and food services, retail spending was up 2.2% year-over-year.

A more telling picture is a look at Q4's total spending, which reached $1.35 trillion, versus $1.30 trillion in the fourth quarter of last year. Shoppers accelerated their spending into an earlier part of the quarter. November's year-over-year consumption was up 4.5%. Compared to that breakneck speed, it would have been surprising if spending didn't relatively slow. October's spending was also oddly high, as retailers and shoppers alike sought to beat other retailers and shoppers to the best deals.

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Even then, however, there's more to the story.

Yes, the pace of spending growth was the weakest it's been in nearly a decade, but it must be mentioned that December's total was up against a monumentally tough comparison. That is, in December of 2017, the nation's retail consumption grew a whopping 5.7%. Any plausible number produced this past holiday shopping season was going to look tepid, as the bar was set so high.

Regardless, the report and the subsequent headlines spurred chatter of a looming recession.

Anything's possible. Given nearly every other economic data nugget though -- not the least of which is record-high employment levels and record high hourly pay rates -- those recession fears are tremendously overblown right now.  

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