December retail sales indicate strong economic growth to end the year
December retail sales data showed the U.S. economy grew at a strong pace in 2024 amid questions about how quickly the Federal Reserve will cut interest rates.
The quarterly GDP reading for the quarter, which includes a number of volatile categories and factors, rose 0.7% on Thursday, beating economists’ expectations for sales growth of 0.4%.
Core retail sales rose 0.4 percent in December, less than the 0.6 percent economists were expecting, according to Bloomberg data. Meanwhile, retail sales in November improved to 0.8% from the preliminary reading, which showed an increase of 0.7% in the month. Census Bureau information.
December sales excluding autos and gas rose 0.3%, below consensus estimates for a 0.4% increase.
“This was a strong report that raised our fourth-quarter GDP growth estimate to 2.9% (from 2.7%),” Paul Ashworth, chief North American economist at Capital Economics, said in a note to clients on Thursday.
A 4.3% increase in sales for miscellaneous store retailers led the gain, while a 2% decline in construction materials sales led the decline. Sales of building materials are not included in the control group.
“Overall, this year’s holiday shopping season was stronger than last year, as a strong labor market continued to support household income growth,” Wells Fargo senior economist Tim Quinlan said in a note to clients on Thursday. That leaves retail sales in a healthy position as we head into 2025. “
The report comes as investors are closely monitoring the health of the US economy. Last Friday’s December jobs report showed the U.S. labor market finished 2024 stronger than many investors expected, leading them to believe the Fed will not cut interest rates as quickly as expected.
As of Thursday morning, investors were pricing in a less than 50% chance the Fed will cut interest rates until at least the June meeting. With the CME FedWatch tool.
Strength in consumer spending and the labor market, higher inflation – yesterday’s refreshing headline (inflation) print – and the prospect of changes in tariffs and immigration policy support the view that the Fed will move sideways. The first half of the year,” the country’s chief economist Kathy Bostjanczyk wrote in a note to clients on Thursday.
Josh Shafer is a Yahoo Finance reporter. Follow him with X. @_joshschafer.
