Retail Sales Inched Up in December to End a Record Year

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Retail SalesBy MARTIN CRUTSINGER, AP Economics Writer


WASHINGTON -- Retail sales barely rose in December, but the gain was enough to lift sales to a record level for 2011. It marked the largest annual increase in more than a decade.

Sales inched up 0.1 percent in December to a seasonally adjusted $400.6 billion, The Commerce Department said Thursday. It was the second straight month that sales have topped $400 billion. Never before had monthly sales reached that level.

The government revised the November sales to show a stronger 0.4 percent gain -- twice the original estimate. That pushed sales in November above $400 billion on a seasonally adjusted basis.

Separately, weekly applications for unemployment benefits spiked to a seasonally adjusted 399,000, the Labor Department said. But the gain was largely because companies let go of thousands of workers after the holiday season.

Economists said such a jump is typical in early January and downplayed the increase. It followed three months of steady declines that had brought applications to their lowest level in more than three years.

A December of Discounts

For all of 2011, retail sales totaled a record $4.7 trillion, a gain of nearly 8 percent over 2010. It was the largest percentage increase since 1999

Steady sales gains have fueled a 20 percent surge from the low during the recession. Monthly sales are even 6 percent above their pre-recession high.

The figures confirm evidence that the economy was strengthening as 2011 ended.

One caveat: Many retailers said they had to offer steep discounts in December to attract holiday shoppers.

Those discounts showed up in weaker department store sales. They fell 0.2 percent in December. A broader category that includes department stores like Macy's and big chains such as Wal-Mart and Target showed an even larger decline last month: 0.8 percent.

"Although consumer spending is not particularly robust, households do continue to spend and provide moderate support for the overall economy," said Steven Wood, chief economist at Insight Economics.

The strength last month was led by a 1.5 percent jump in auto sales. Furniture store sales rose 1 percent. Hardware stores reported a 1.6 percent increase. But sales at electronics and appliance stores sank nearly 4 percent.

Sales at gasoline stations fell 1.6 percent. That decline reflected mainly lower gas prices. Excluding gas stations, retail sales would have risen 0.3 percent in December.

Restaurants and bars did better over the holidays. Their sales rose 0.7 percent.

A Brightening Economic Picture

The government's retail sales report is its first look each month at consumer spending, which accounts for roughly 70 percent of economic activity. A healthy report typically signals a stronger economy.

Compared with the same time last year, retail sales have risen 6.4 percent.

This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy's best last year. The report pointed to higher holiday and auto sales, along with increased travel.

The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8.5 percent, the lowest in nearly three years.

Many analysts predict that economic growth rose to an annual rate of roughly 3 percent in the final three months of 2011. That would be an improvement from the summer, when the annual rate was just 1.8 percent. And it's much better than the 0.9 percent growth rate in the first six months of 2011.

For the holiday season, many retailers drew customers by staying open on Thanksgiving Day or offering sharp discounts. Discounting helped generate record sales at the start of the shopping season and in the days before Christmas.

A survey of 25 merchants by the International Council of Shopping Centers found that revenue in December at stores open at least a year rose 3.5 percent over the same month a year ago. For November and December combined, the year-over-year gain was 3.3 percent.

That was a respectable increase. But it was less than the 3.8 percent year-over-year gain from 2009 to 2010.

The government's monthly report is a broader gauge of retail sales. It covers purchases at all retailers, not just at major national chains. It also includes auto dealerships, restaurants and bars, grocery stores and gasoline stations.

U.S. automakers have said that November and December were their two best sales months in 2011. Their U.S. sales rose 10 percent to 12.8 million in 2011, a 23 percent jump from the recession year of 2009.

Chrysler Group reported sales surged 26 percent for all of 2011. General Motors Co. saw sales rise 13 percent for the year. Ford Motor Co. reported an 11 percent gain for 2011.

The government's retail sales report is seasonally adjusted. That way, the current month can be compared with the previous month. But the figures aren't adjusted for inflation.

A separate government report each month measures consumer spending. It's an even more inclusive gauge. It covers all spending at retailers -- for both durable goods like cars that are expected to last for years and nondurable goods such as food.

This report also covers spending on services. Services include items such as doctor's visits, airline tickets, apartment rentals and utility bills. The service category makes up two-thirds of consumer spending and isn't covered in the retail surveys.


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18 Comments

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winintnet

WHAT A BUNCH OF CRAP THE MEDIA PUTS OUT--- I DONT KNOW WHO THEY ARE TRYING TO FOOL--- IM NOT BUYING IT ANY MORE--- THEY SAY SALES ARE UP 8 % BUT THEY DONT SAY PRICES HAVE INCREASED BY 10TO 15 % SO IN MY BOOK WE ARE ACTUALY DOWN BY 2 TO 7 % MAYBE MORE.. WHEN I SEE A 5% INCREASE IN MY PAY AND PRICES FOR EVERY DAY GOODS DROP BY 10% THEN I WILL KNOW THING ARE GETTING BETTER.---THE ONLY ONES WHO BENIFIT FROM INFLATION ARE THE ONE WHO GET THE NEW PRINTED MONEY FIRST AND THATS THE GOVERNMENT FOLKS --- WHO SAY DEFLATION IS BAD --- IT WILL LEVEL THE PLAYING FIELD.

January 15 2012 at 2:17 PM Report abuse rate up rate down Reply
Mike

Same OLD, tired, libtard, LIE! Always with the single digit growth. Real inflation is over 15% and rising. This means we spent more to get LESS! That’s called CONTRACTION to all non kool aid libtards!

January 15 2012 at 12:12 PM Report abuse +1 rate up rate down Reply
gainder2

So the consumer is fine for now, until the "G"economy takes over with bogus programs like mandatory healthcare etc. I am folding my small business tent this month, I won't play DCs games seeing how over 1000 companys have been given a PASS by the administration on having to participater at all in the pending healthaggeden coming to our economy. Meaning all others, both individuals and small companys are paying for those blessed by Obama.
Wow, hey if you ever wanted to deepen the split between americans that already exists, well Mr Obama, this is one fine way to do it.

January 15 2012 at 9:51 AM Report abuse rate up rate down Reply
herkminer

I dont see at all how any of this information is real. Unemployment still very high, forclosures still very high, property taxes continue to rise, Medical insurance cost still out of control, Fewer and fewer good paying jobs, Home values still dropping. Now all of a sudden people decide to spend a record amount of money? Someone is fixing the numbers or just plain lying. I only buy what i need and can afford. My mortgage is paid off. Credit cards for emergency only. I heat with wood, have solar hot water and i am putting in solar electric. car and truck are paid off. Nothing is bought for "Style" like the craziness over air jordan shoes. Have just a basic cell phone. I cannot justify the cost of gadget I Phones or the likes. I ask " what is the real practical use" before i buy something. It saves a lot money..

January 13 2012 at 10:50 AM Report abuse +1 rate up rate down Reply
savemycountry911

The left is trying to spin this into a good economy. Nobody buys that ........................ unless they bought hope and change.

January 12 2012 at 8:05 PM Report abuse +2 rate up rate down Reply
1 reply to savemycountry911's comment
theycallmeroy2

Good economy? No. Improvement? Yes. Unless you think the Fed's beige book release is " just the left lying to you." In which case one could argue the right did the same, since Bernanke was Chairman under Bush, with beige book releases. Which, btw, missed the housing implosion.

January 12 2012 at 8:40 PM Report abuse rate up rate down Reply
1 reply to theycallmeroy2's comment
savemycountry911

Spin all you want, Obama has been a disaster. Borrowing and printing into the trillions to get us out of debt........nonsense.

January 12 2012 at 10:33 PM Report abuse +3 rate up rate down
marine1942

Jive it anyway you want but this country is in a world of hurt. Drive past the strip malls and see the empty stores
Would start a store now ? Didn't think so

January 12 2012 at 7:42 PM Report abuse +3 rate up rate down Reply
1 reply to marine1942's comment
theycallmeroy2

Depends on where you live. In my area of the woods, retail space is hard to find. Business are staying where they are, instead of having a variety of places to go, since commercial space is at a premium. And landlords are willing to negotiate with their tenants instead of having empty space, which makes banks very nervous.

January 12 2012 at 8:27 PM Report abuse rate up rate down Reply
Greg

With taxpayers paying the mortgage of millions of home "owners", it's no surprise these folks have lots of extra money to buy stuff instead of paying their mortgate.

And me, as a renter (and unemployed) can't find a job and am about to be evicted, am forced to help make the payment for other people's houses.

This just doesn't seem okay to me.

January 12 2012 at 4:57 PM Report abuse +5 rate up rate down Reply
1 reply to Greg's comment
savemycountry911

It is called redistribution of wealth. Never mind that those forced to pay are not wealthy.

January 12 2012 at 8:06 PM Report abuse +1 rate up rate down Reply
captmerit

who buys all that cheap plastic garbage?

January 12 2012 at 3:55 PM Report abuse rate up rate down Reply
Austin

Seasonally adjusted sales data, the figures aren't real. Where is the actual data on how much was really sold? Probably won't be as rosy, no way was it close to being a record, anyone working retail can tell you that.

January 12 2012 at 3:50 PM Report abuse +5 rate up rate down Reply
1 reply to Austin's comment
bggdg

Actually, the "seasonal adjestments" in November/December are downward, meaning the unaltered data would be far better. In other words, absent these adjustments figures would look much rosier. Of course, the opposite is true for the January figures (which haven't been released yet, and aren't the subject of the article).

In fact, that is the exact purpose of the adjustments.

January 12 2012 at 4:08 PM Report abuse +1 rate up rate down Reply
1 reply to bggdg's comment
bggdg

You make an outstanding village idiot for the dumbest 1%

January 12 2012 at 11:17 PM Report abuse +2 rate up rate down
Jeff

Ok on sales increase.....at what cost to profits??? Why do they post this crap....anyone out there, that is not rich, feel better?

January 12 2012 at 1:24 PM Report abuse +3 rate up rate down Reply
1 reply to Jeff's comment
bggdg

Economic data is not collected and disseminated for the purpose of making anyone "feel better" (or worse).

Instead, it is collected and dissemenated for the purpose of informing.

If blissful ignorance makes you "feel better", don't read the data.

January 12 2012 at 2:41 PM Report abuse -2 rate up rate down Reply
1 reply to bggdg's comment
savemycountry911

someoneole is senile

January 12 2012 at 8:03 PM Report abuse +1 rate up rate down