US Retail Sales Preview: Forecasts from nine major banks, consumers continued spending in December

The fact that the US economy has not slipped into recession so far is also due to robust private consumption. This is unlikely to have changed much in December. Retail sales are likely to have increased by 0.4% compared to November. Our forecast is based, among other things, on data from the automotive industry, which reported a 3% increase in unit sales. At the same time, the mild weather should have boosted sales of building materials. The price of gasoline had no major impact this time, remaining at the November level after adjustment for seasonal influences. We expect a slight increase of 0.3% in core category, sales excluding autos, gasoline and building materials, and thus a certain calming after the strong increase of 0.6% in November.

US retail sales are likely to have grown solidly in December, with consumer confidence buoyed by rising equity markets. We know that auto volumes rose 3% to an annualised 15.8m units while weekly credit card spending numbers held up well, with prices rising 0.3% MoM, according to CPI data – remember this is a dollar value figure report. Industrial production won’t be as robust though, expanding perhaps 0.1%, with manufacturing set to be close to flat on the month given the ISM manufacturing report has been in contraction territory since October 2022. Autos may be a bright spot as output continues to recover from earlier strike action, but weak order books are an issue for most other sub-sectors. Utilities output will be a drag given warm weather implies less heating demand while oil and gas extraction may have been helped by those warmer weather conditions.

We expect a MoM uptick of +0.4%, up from +0.3% in November.

US retail sales likely ticked higher in December (+0.5% MoM), with slightly stronger growth than November (+0.3%) thanks to strong unit auto sales and higher gasoline prices.

Judging from previously released data on auto sales, motor vehicles and parts dealers could have contributed positively to the headline figure. Outlays at gasoline stations, on the other hand, may have dropped, reflecting lower pump prices. All told, we expect total sales to have expanded 0.5%. Ex-auto outlays could have been a tad weaker, advancing 0.2% MoM.

We look for total sales to rise by 0.5%. Excluding autos, we expect a 0.3% increase. 

We expect a solid retail sales report for December with total retail sales increasing by 0.5% MoM primarily driven by autos. Excluding autos, retail sales should increase by a more modest 0.2% MoM. Control group sales should also increase by a modest 0.2% MoM. Overall, this report would be consistent with consumption continuing to grow as the labor market remains solid (although there are some weaker signs under the surface) and incomes increase.

We forecast retail sales rose 0.4% in December. Excluding autos, we expect a more modest 0.2% uptick. Should our point estimate come to fruition, our estimate of holiday sales will come in over 4% on a YoY basis, which is a respectable but muted gain relative to the past few years of exceptional spending growth.

High-frequency credit card spending suggests retail sales likely ended 2023 not with a bang, but a whimper. Despite the solid labour market conditions, consumers are coming off a splurge in Q3 which would have pulled forward some consumption for durables. Combined with a saving rate that has started to drift up over the past few months, these signals add up to a US consumer due for a much needed breather. Our expectation is a modest 0.1% MoM growth for both headline sales and the control group. Our views on retail sales are somewhat below consensus but that should not mean too much. Surprises in retail sales – in either direction – likely have modest consequences for monetary policy in the near-term.