US Retail Sales Stumble: Flat 0.0% Print Misses Forecasts, Stokes Soft-Landing Jitters

With a disappointing 0.0% month-over-month result in the most recent release, US Retail Sales fell well short of projected +0.3% to +0.6% and showed a distinct slowing from the upwardly revised +0.6% gain in November. Year-over-year growth also slowed dramatically, underlining a loss of consumer spending momentum going into the next year. The control group, which excludes volatile categories like autos, gasoline, building materials, and food services, fell by -0.1%, underperforming estimates of +0.3% and following a small +0.2% previous print, emphasizing weaker underlying demand.

Analysis of industries showed mixed but mostly poor outcomes: auto sales decreased by -1.2%, gasoline station revenues fell -2.1%, building materials dropped, and food and beverage businesses increased +0.8% and nonstore merchants (internet) grew +1.1%. The broad-based softness—compounded by downward revisions to prior months (including January now at -1.2%)—suggests weather-related volatility and lingering inflation pressures may be weighing more heavily on discretionary spending than previously expected.

The miss rekindled worries regarding the soft-landing path of the economy and triggered a new wave of conjecture on Fed rate cuts. Equities traded mixed near recent highs, but Treasury yields declined (10-year below 4.5%). Though disappointing, the data still shows underlying resilience in some areas of the consumer landscape, according to economists who noted that the unexpected drop-off has turned near-term mood toward caution amid worries of a more severe slowdown.