(Bloomberg) -- U.S. retail sales declined at the close of the holiday-shopping season, wrapping up a painful year for the nation’s merchants as the pandemic forced store closures and kept consumers at home.
Total retail receipts decreased 0.7% in December from the prior month after a downwardly revised 1.4% drop in November, Commerce Department figures showed Friday. The median forecast in a Bloomberg survey of economists called for no change in December. The unadjusted value of sales increased just 0.6% in 2020 compared with a year earlier.
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The disappointing retail results reflected weaker sales at department stores, online merchants and restaurants, indicating the biggest part of the U.S. economy -- consumer spending -- took a step back in fourth quarter.
While additional fiscal support for households will help bolster Americans’ financial positions, the next handful of months for retailers may be challenging until many more Americans are vaccinated and travel and leisure activity is restored.
Federal Reserve Chair Jerome Powell said during a virtual event on Thursday that the economy is still far from where the Fed would like it to be, but that “there could be quite exuberant spending and we could see some upward pressure on prices” as the pandemic recedes.
“The real question is, how large is that effect going to be, and will it be persistent?” he said.
The coronavirus relief package signed by President Donald Trump in late December -- which included $600 stimulus checks for individuals and extended unemployment benefits through March -- could limit further deterioration in retail sales early this year.
President-elect Joe Biden released details of another relief package on Thursday, which proposes additional government stimulus payments of $1,400.
Retail sales excluding autos declined 1.4% in December, the most since April. So-called control group sales, which exclude food services, car dealers, building-materials stores and gasoline stations, plummeted 1.9% last month, also the most in eight months. The measure is often considered more reflective of underlying consumer demand.