According to analysts at Wells Fargo, the retail sales report released today showed sales were reasonably solid in December, but downward revisions to previous months mean that year-over-year growth in holiday spending was not quite as strong as there were expecting. 

Key Quotes: 

“Data released this morning showed that overall U.S. retail sales rose 0.3% on a seasonally adjusted basis in December relative to the previous month, matching the consensus forecast. Sales in November, which were originally reported to have risen 0.2%, were revised higher to 0.3%. On a year-overyear basis, overall retail spending was up 5.8% in December, which was a 16-month high.”

“We look for continued solid growth in real consumer expenditures, on the order of 2% or so, in coming quarters.”

“If there is any disappointment in the today’s data release it is that “holiday sales” look to have been weaker than we were anticipating. (We define “holiday sales” as total retail spending less sales at auto dealers, gasoline stations and restaurants.) Indeed, media reports over the past few days indicate that some retailers were disappointed by the holiday shopping season.”

“In the last two months of the year, our measure of “holiday sales” was up 4.1% on a year-ago basis (middle chart). Although weaker than we expected, this growth rate was a marked improvement over the 2.6% growth rate that was registered in 2018. Interestingly, non-store retailers, which includes online sales, did very well in 2019.”