Retail sales plummeted by 1.9% in December after several months of consecutive increases, the Commerce Department reported Friday.
The report was far worse than expectations, with the consensus among economists being that retail sales would actually increase slightly. Additionally, the November gain was revised down a bit to 0.2%.
“Loss in momentum in November turned into a sharp weakening in December,” noted Rubeela Farooqi, the chief U.S. economist for High Frequency Economics.
The stock market was down after Friday’s report following news of the retail sales numbers and a mixed set of bank earnings.
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The new numbers come a day after a report that producer prices increased by 9.7% for the year ending in December, the highest rate of growth since the Labor Department began keeping records. Consumer prices also increased 7% in the 12 months ending in December, the fastest pace in decades.
The persistent inflation has led the Federal Reserve to gear up to raise interest rates this year for the first time since 2018. This year could see several interest rate hikes, the first of which might occur in March.
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The omicron variant of COVID-19 has also been increasing across the country. New cases, hospitalizations, and deaths have been rising significantly over the past several weeks. The new surge is raising further concerns that it could cut into the country’s economic recovery.
