U.S. Retail Sales Unexpectedly Flat in December, Signaling Consumer Pullback

Washington, Feb. 10 (Reuters) – U.S. retail sales came in unchanged in December 2025, surprising economists who had expected a modest increase and raising new questions about consumer spending momentum heading into 2026. This lackluster finish to the holiday shopping season could weigh on broader economic growth prospects.

The Commerce Department’s Census Bureau report showed total retail sales — unadjusted for inflation and representing the bulk of consumer purchases of goods — remained essentially flat from November, following a robust 0.6% gain the previous month. Analysts surveyed by Reuters had forecast a 0.4% increase for December.

Consumers Hit the Brakes at Year’s End

December’s flat reading marks a sharp deceleration after earlier strong numbers, suggesting that Americans scaled back spending as the holiday rush wound to a close. Retail data are a critical gauge of consumer behavior, which drives roughly two‑thirds of U.S. economic activity.

Economists point to several factors behind the cooling retail trend, including persistent inflation, growing concerns about the labor market, and lingering effects from the late‑year government shutdown that delayed data releases. These influences may have prompted households to tighten their wallets after months of resilient spending.

Mixed Picture Across Retail Categories

The December breakdown showed a broad slowdown across multiple categories: motor vehicle and parts dealers saw sales ease, while furniture, electronics, clothing, and general merchandise outlets all posted declines. Sales at food services and drinking places — a key discretionary spending indicator — also dipped slightly.

Not all sectors weakened. Receipts climbed at building materials and garden equipment stores, and there were modest gains at sporting goods, hobby, and music shops. Online retail activity edged up after stagnating in November.

Economists also track what are known as core retail sales — which strip out volatile categories like autos, gasoline, and building materials to provide a clearer signal of underlying consumer demand. These core sales fell 0.1% in December, the first decline in several months, underscoring softer spending momentum.

Implications for the Broader Economy

Consumer spending has been a bright spot for the U.S. economy amid a backdrop of slowing wage growth and uneven labor market signals. While spending helped fuel solid growth through much of 2025 — contributing to an annualized 4.4% GDP expansion in the third quarter — the December retail data suggest the pace may be easing.

Some analysts caution that the flat reading could be due in part to seasonal adjustment challenges and the delayed release of data due to the extended government shutdown. Even so, the report may prompt forecasters to temper expectations for first‑quarter consumer activity and economic growth.

Looking ahead, other economic indicators — including upcoming employment and inflation data — could influence the Federal Reserve’s monetary policy decisions. The central bank has held interest rates steady in recent meetings, citing mixed signals on the labor market and persistent price pressures.

A Patchwork Consumer Landscape

Experts note that spending patterns are increasingly uneven across income groups. Higher‑income households, buoyed by stock market gains and home equity values, continue to support certain retail categories, while middle‑ and lower‑income consumers face tighter budgets amid slow wage growth.

Overall, December’s flat retail sales reading brings a cautionary note as the economy enters 2026. Whether this slowdown reflects a temporary pause after a strong holiday period — or more enduring shifts in consumer behavior — will be clearer as new data arrive in the weeks ahead.