U.S. Retail Sales Fell 0.7% in December as Covid-19 Cases Rose

U.S. consumers cut back on retail spending at the height of the holiday season as the country confronted a surge in coronavirus infections.

Retail sales, a measure of purchases at stores, restaurants and online, declined a seasonally adjusted 0.7% in December from the prior month, the Commerce Department said Friday. That marked the third consecutive month of declines, and November’s retail sales were revised lower to a 1.4% drop, after a stretch of growth last spring and summer.

Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said December retail sales were “an absolute disaster.” Still, he said that “no matter how far we fall in the short run, the assumption in financial markets is that we’ll recover once the pandemic ends.”

Spending declined at online retailers, a category which includes companies such as Amazon.com Inc., bars and restaurants, and at electronics, groceries and department stores, as consumers cut back on both in-person and online shopping. Consumers spent more on home improvement, at health and personal-care stores, and on clothing and gasoline.

According to the National Retail Federation, holiday sales rose 8.3% compared with the same period a year ago, exceeding the trade group’s estimate of a 3.6% to 5.2% increase. Home-improvement and online retailers posted big gains, while sales at apparel chains and department stores—which historically tend to do well during the season—continued to decline. Holiday sales exclude restaurants, gasoline and auto sales, and measure the year-over-year gains in the combined November-December period.

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