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Retail sales sink 1.2% in December in the worst plunge in nine years





Bloomberg News / Landov

The holiday shopping season turned out to be a bust, according to the government's long-delayed report on December sales.

The numbers: Sales at U.S. According to a long-delayed government report, retailers have been fizzled in December and posted the largest decline in nine years.

Retail sales fell 1

.2% in December, the U.S. The Census Bureau said Thursday. It's the biggest drop since September 2009, a few months after the end of the Great Recession.

Economists are polled by MarketWatch.

What happened: Sales fell in every retail category, except auto dealers and home centers. Auto sales rose 1% and home-center sales surged 0.3%.

Sales fell 5.1% at gas stations, but that was not unexpected. Gasoline prices have fallen since last fall.

What's been surprising was 3.9% reported a decline in sales at internet sellers. That would mark the sharpest drop since November 2008 – the middle of the last recession.

By all industry accounts, online merchants led by Amazon

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     AMZN, + 0.12%

and eBay

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     EBAY, + 0.19%

Gains big sales gains

Less surprisingly, sales tumbled 3.3% at department stores that have been losing ground for years to mostly Internet-based competitors. Traditional brick-and-mortar chains such as Macy's

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     M, + 1.82%

Kohl and Nordstrom posted disappointing sales in December.

Sales also fell at bars, restaurants, apparel stores, grocers, home furnishers, pharmacies and outlets that sell hobby items such as books and sporting goods.

Big picture: The sales slump in December is likely to weigh on the government's official scorecard for the economy known as gross domestic product. Economists estimated the GDP in the last three months of the year to slow to 2.7%, but now that estimate could be even lowered.

What does it mean for the economy in 2019?

Hard to say. The stock market is tanked in December and the talk of recession has just become all the rage, and that may have hurt sales.

At the same time, however, companies continued to hire in a strong clip in January. As long as the labor market remains healthy, the economy should avoid recession.

Market reaction: Futures for the Dow Jones Industrial Average

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DJIA, + 0.46%

and S & P 500

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     SPX, + 0.30%

turned down after both the weak retail report and a surprising increase in new jobless claims.

The 10-year Treasury yield

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     TMUBMUSD10Y, -1.96%

fell 5 basis points to 2.65% after the data release, and the U.S. dollar

                            
                            
                                  
      
      
      
      
      
      
      
      
      
                            
                                     DXY, -0.22%

also turned lower.

What they say : "These data are so wild that we have to expect hefty upward revisions, but if they stand, they are very unlikely to be representative of the trend over the next few months. The consumer is no longer enjoying tax cuts or falling gas prices, but that's no reason to expect a rollover, "said Ian Shepherdson, chief economist at Pantheon Macroeconomics.


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