Retail activity in the United States lost momentum over the crucial December holiday period, adding to concerns that the economy may be cooling. Figures published by the Commerce Department on Tuesday showed sales were flat compared with November, when they had risen by 0.6%. The slowdown follows months in which shoppers continued to spend despite growing unease about economic conditions.
Analysts point to a softer labour market, stubborn inflation and easing wage growth as key factors behind the subdued performance. Several sectors saw noticeable declines, particularly those vulnerable to tariffs. Sales at furniture shops slipped 0.9% month on month, while clothing retailers recorded a 0.7% fall. Although overall retail sales were 2.4% higher than a year earlier, that marked a slowdown from November’s 3.3% annual increase.
Consumer expenditure underpins more than two-thirds of US economic output, making the figures especially significant. Some economists cautioned that December’s weakness may prove temporary. While job creation remained modest, the unemployment rate edged down to 4.4%, easing earlier fears of a sharper slowdown. Upcoming data on employment and fourth-quarter growth are expected to provide further clarity.
There are also signs of a widening gap between households. Wealthier Americans, buoyed by record stock market gains, continue to spend freely. Meanwhile, wage growth slowed to just 0.7% in the final quarter of 2025, its weakest pace in over four years, prompting many families to prioritise essentials over discretionary purchases.
