December’s Retail Sales Drop Misses the Bigger Picture
A pullback in spending in the final weeks of the year didn’t stop retailers from enjoying a solid holiday season. Here’s why.
Retailers held up reasonably well amid serious tumult and shifting spending patterns caused by the pandemic.
Photographer: Kena Bentancur/AFP via Getty Images
Consumers didn’t end 2020 with a bang, Commerce Department retail sales figures show. But the unusual dynamics of a year defined by the pandemic — which gave rise to trends such as shoppers buying Christmas gifts earlier and shifting their spending from experiences to goods — meant a December pullback didn’t stop the retail industry from enjoying a solid holiday season.
Data released Friday revealed that retail sales sank 0.7% in December from a month earlier, a weaker-than-expected result reflecting renewed caution among shoppers in a month when cases of Covid-19 exploded and the economy shed 140,000 jobs. This is something to watch. But a look at the entire holiday season on a year-over-year basis offers a much sunnier picture: Excluding categories such as motor vehicles, the National Retail Federation reported that sales in the period were up 8.3% from 2019, a booming increase that far exceeded the trade group’s own forecast and several others. The result is consistent with behavior consumers stuck to throughout 2020: With limited opportunity to spend on vacations, theater tickets and other services, they poured their money into goods.