Census Bureau Data: Retail Sales Off in December

By SBE Council at 15 January, 2021, 2:36 pm

by Raymond J. Keating-

The news on retail sales for December in the latest report from the U.S. Census Bureau was worse than expected.

Retail and food services sales for December declined by 0.7 percent compared to November, after a drop of 1.4 percent in November and a slight decline in October. Market expectations were pointing to a decline in December given the resurgence in COVID-19, but this came in worse than expected.

If you factor out autos, the December decline was even deeper, down by 1.4 percent. In fact, other than autos, gas station sales, building materials, and clothing, the story was pretty grim in December vs. November. Even nonstore retail - that is, mainly ecommerce - was down by 5.8 percent compared to November. Food services and drinking places fell by 4.5 percent.

As noted in the following chart, after the big declines in March and April, retail experienced a rather nice bounce back through September. But matters turned south again in the last three months of the year.

As for all of 2020, total retail and food services sales grew by a meager 0.6 percent. The big star, unsurprisingly, was nonstore retail, which jumped by 22.1 percent, followed by building materials increasing by 14 percent. Meanwhile, the largest drop offs occurred in clothing retail (-26.4 percent) and food services and drinking places (-19.5 percent).

As SBE Council has noted time and again, while consumption accounts for two-thirds to 70 percent of GDP, consumers are followers. They follow whether or not entrepreneurs, businesses and investors are starting up, expanding, and investing in enterprises, and of course, whether they are hiring or not. That, in turn, points to the importance of providing a sound policy foundation for entrepreneurship and investment, such as tax and regulatory relief, and free trade.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.