By Harriet Torry and Sarah Nassauer
U.S. consumers cut back on retail spending during the December
peak of the holiday season as the country confronted a surge in
The seasonally adjusted 0.7% month-over-month drop marked the
third straight decline in the Commerce Department's measure of
spending at stores, vehicle dealerships, restaurants and online,
after a stretch of growth last spring and summer.
Economists surveyed by The Wall Street Journal had forecast that
retail sales decreased a seasonally adjusted 0.1% in December from
a month earlier.
Spending declined in a number of key categories, including
online purchases, bars and restaurants, electronics, groceries and
department stores. Spending increased on home improvement, health
and personal-care products, clothing and gasoline.
Excluding motor vehicles and gasoline, retail spending fell by
2.1% during the month.
December normally marks the peak of the holiday shopping season,
but this year businesses are reporting mixed sales results. The
U.S. is in the middle of an upswing in Covid-19 cases, with states
such as California imposing new business restrictions and
individuals limiting activities. Employers also cut jobs in
December for the first time since the spring.
Real-time data shows that weakness in spending continued at the
start of this year. JPMorgan Chase & Co.'s tracker of 30
million credit and debit cardholders recorded a 1.1% decline in
spending from a year earlier in the week through Jan. 10.
Businesses and economists expect the next few months could be
sluggish before activity picks up as more people are vaccinated and
the pandemic starts to ease. Right now, infection rates remain high
and vaccination programs got under way more slowly than
For Eric Boyd, an airline pilot based in the Woodlands, outside
of Houston, holiday shopping wasn't in the cards this year.
ExpressJet, which operated feeder flights for United Airlines,
first furloughed him from a training position and then it ceased
operations at the end of last September.
He has been collecting unemployment aid and "burning through his
401(k)" to help support his two children -- who are 3 and 5 years
old -- and cover rent. He said he didn't buy them holiday gifts,
though he took them to Louisiana to visit his mother, who had
purchased some decorations and toys for the children. "I think the
people in my life understand given everything that has gone on," he
said. "Gifts were definitely not happening this year."
Mr. Boyd was offered a new job at a cargo airline that starts
next month, he said, and can just squeak by until then. "My raft is
running out of air," he said. "But I can see land."
Todd Leff, chief executive of Hand and Stone Franchise Corp.,
which provides massage and facial spa services at 485 locations,
said business had been recovering from August through November, but
slowed again in December, dragged down by weakness in gift-card
"Folks were concerned about going out shopping in December and
that did hurt our business," he said. Still, demand has picked up
in early January, according to the CEO of the Trevose, Pa.-based
business, who is optimistic that after the first quarter "more
widespread vaccinations are going to see a huge uplift in pent-up
There are signs that the second round of stimulus payments to
households distributed under the roughly $900 billion coronavirus
aid package signed into law Dec. 27 have started to boost consumer
spending. NPD Group, which tracks retailers, said Thursday that
sales at discretionary retailers increased 27% in the week ending
Jan. 9 -- the largest lift in retail since the start of the
Physical traffic to retail stores fell sharply this holiday
season, according to firms that use sensors and cameras to track
in-store shopping. Between Nov. 22 and Jan. 2, store traffic fell
33% year-over-year, according to Sensormatic Solutions, which uses
cameras and software to track visits to thousands of malls and
shopping centers. By contrast, in November and December online
sales grew 32.2% year-over-year to $188.2 billion, according to
Retailers also pushed holiday deals earlier into October, aiming
to reduce store crowding throughout the season and smooth
e-commerce supply-chain bottlenecks.
"You are sitting at home. You don't know what's happening in the
world and for me the most comforting thing to do is to curl up in
front on my screen and shop," said Sequoia Ross, a 43-year-old
owner of a frozen cookiedough company. She said she bought all her
Christmas and Kwanzaa gifts online for the first time this winter,
avoiding stores where people might not be masked or distanced.
Ms. Ross, who lives in Richmond, Va., said she spent more on
gifts compared with last year. During the pandemic, the family is
saving money on travel and entertainment, the mother of four said,
so splurged on gifts such as iPads, iPhones and computers. "I felt
that if this was going to be our new life, then we would need
Retailers have so far reported mixed holiday sales results.
Companies that sell in-demand pandemic products, such as food,
fitness gear and home goods, continued to see outsize sales
Albertsons Cos., which owns the Jewel-Osco and Safeway chains,
reported strong sales in the quarter ended Dec. 5, as consumers
continue to buy more groceries than usual during the coronavirus
Lululemon Athletica Inc. and Lands' End Inc. this week joined a
list of companies raising financial guidance for the fourth
quarter. Both said they benefited as consumers turned to
comfortable clothing during the pandemic. Meanwhile, Nordstrom
Inc.'s net sales fell roughly 22% for the nine-week holiday period
ended Jan. 2, compared with the same period a year ago.
Margaret Burns, a 42 year-old mother to three boys who lives in
Mount Olive, N.J., said she spent more on Christmas gifts, in part
to compensate for the year's difficulties, including remote
schooling and isolation from many friends and family.
"We overdid it because of the kind of year these kids had," said
Ms. Burns. Her children received motorized dirt bikes, videogames,
an iPhone, AirPods and virtual reality sets. The family "used the
money we didn't spend on vacations," she said.
--Suzanne Kapner and Hannah Lang contributed to this
Write to Harriet Torry at firstname.lastname@example.org and Sarah
Nassauer at email@example.com
(END) Dow Jones Newswires
January 15, 2021 09:03 ET (14:03 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.