Retail Sales Plummet In December (DIA, SPY, QQQ, TLT, IWM, XRT)

Myles Udland

Retail sales plummeted in December.

Headline retail sales fell 0.9% in December, while "core" sales, which exclude the price of autos and gas, fell 0.3%.

Expectations were for sales to fall 0.1% month-on-month, after a 0.7% increase in November.

Sales excluding autos and gas were expected to rise 0.5% in December.

Analysts at Bespoke Investment Group noted that this was the biggest miss relative to expectations since May 2010. 

For the full year, retail sales were up 4% in 2014 when compared to the prior year. 

Gasoline station sales fell 14.2% in December against the prior year, and in the fourth quarter gasoline station sales were down 7.8% from last year.

In a note to clients following Wednesday's report, Ian Shepherdson at Pantheon Macro wrote that, "In one line: Falling gas prices and noise, not signal, explain the drop."

Here is Shepherdson:

[M]ost of the damage was done by a 6.5% drop in gas stations' sales, due to lower prices - bizarrely, most forecasts seemed not to reflect this ... You can expect to read about how the Dec data mean people are choosing not to spend their gas price windfall, but that view is deeply myopic.

In November, headline retail sales rose 0.7%, topping expectations for a 0.4% increase. Sales excluding auto and gas rose 3.9% compared to the prior year last month, the fastest year-on-year increase in 16 months.

Here's the chart from the Census of December's retail sales.

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