January 19th, 2022
The pace of retail sales declined, consumer outlook dimmed, and layoffs grew.
Retail sales declined to $626.8 billion in December, a decrease of 1.9 percent from November’s total of $639 billion, the Census Bureau reported last week. That said, when compared to the same period a year ago, December’s sales were 19.3 percent higher than December 2020.
Retail categories that saw significant losses in December included sales at non-store retailers, such as kiosks, which tumbled 8.7 percent; furniture and home furnishings stores, which fell 5.5 percent; sporting goods, hobby, musical instrument and book stores, which dropped 4.3 percent; electronics and appliance shops, which shrank 2.9 percent; and gas stations, which weakened 2.5 percent.
While December marked a drop, S&P Global’s Chief U.S. Economist Beth Ann Bovino reminded that December’s decline marked the first monthly drop in retail sales after four consecutive months of gains.
“This is not a sign of consumer weakness,” Bovino told the New York Times. “Given that households have relatively strong balance sheets with high savings levels and a strong job market with wages climbing higher, it seems that consumers are not necessarily closing their pocketbooks. They’re taking a brief pause.”
After improving in December, the Index of Consumer Sentiment ticked down to a score of 68.8 in January, which was down 2.5 percent from December’s score of 70.6, according to last week’s preliminary results from the University of Michigan Surveys of Consumers. Compared to the same period a year ago, this was 12.9 percent below January 2021’s score of 79.
The Index of Current Economic Conditions – which describes how consumers feel about the current state of the economy and their place in it – skirted down to 73.2 for January, which was 1.3 percent below December’s ranking of 74.2. When compared to the same period a year ago, January was 15.6 percent below January 2021’s score of 86.7.
The Index of Consumer Expectations – which assesses how consumers feel about where the economy is headed – fell to 65.9 in January, which was 3.5 percent down from December’s score of 68.3. When compared to last year, January’s score was 10.9 percent below January 2021’s ranking of 74.
“While the Delta and Omicron variants certainly contributed to this downward shift, the decline was also due to an escalating inflation rate,” said Surveys of Consumers’ Chief Economist Richard Curtin. “Three-quarters of consumers in early January ranked inflation, compared with unemployment, as the more serious problem facing the nation.”
Initial Jobless Claims
In employment news, first-time claims for unemployment benefits filed by recently unemployed Americans during the week ending January 8th expanded to 230,000, which was 23,000 claims above the preceding week’s unrevised total of 206,000, the Employment and Training Administration reported last week.
The four-week moving average – regarded as a more stable barometer of jobless claims – grew to 210,750 claims, which was 6,250 claims below the previous week’s unrevised average of 204,500.
While claims were higher than the 200,000 claims that job market watchers had forecasted for the week, economists consider any level of first-time claims below 300,000 to indicate a growing job market.
“The spike in the number of Covid cases is forcing temporary business closures, which likely pushed some affected workers to apply for jobless benefits,” Bloomberg Economist Eliza Winger wrote in a public statement last week.
This week, we can expect:
Wednesday – Housing starts for December from the Census Bureau and Department of Housing and Urban Development.
Thursday – Initial jobless claims for last week from the Employment and Training Administration; existing home sales for December from the National Association of Realtors.
Friday – Leading economic indicators for December from The Conference Board.
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