Retail Sales Beat Forecasts, Indicating Potential for Further Economic Expansion
Sales at U.S. retailers exceeded expectations in December, indicating the potential for further economic expansion. While consumer spending remains robust, GDP may slow in the fourth quarter.
Troy D. Hanson
January 17, 2024
Sales at U.S. retailers surged by 0.6% in December, marking a strong finish to the holiday shopping season. This growth exceeded the forecasted increase of 0.4%, indicating that the economy has the potential for further expansion.
The combined sales figures for November and December suggest an even better holiday shopping season than initially expected. These retail sales account for approximately one-third of all consumer spending and provide valuable insights into the overall strength of the economy.
Although consumer spending remains robust, its contribution to the country's gross domestic product (GDP) is expected to be less substantial in the fourth quarter compared to the third quarter. Current estimates indicate that GDP will likely slow down from nearly 5% in the third quarter to a range of 1% to 2% in the final months of the year.
While consumers continue to spend enough money to sustain economic growth and prevent a recession, factors such as high interest rates and persistent inflation have slightly hindered overall expansion.
In response to these developments, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) are anticipated to open lower in Wednesday trades.