Bad Weather Gave Retailers a Tough But Not Worrying December

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Source: U.S. Department of Commerce

Strong consumer spending is essential for the recovery of the American economy. Consumer spending accounts for approximately 70 percent of gross domestic product in the United States, and because government and business spending largely remained remained weak in 2013, the economy depended even more on household spending to fuel growth last year. For economists, the all-important question is where the consumer spending trajectory is headed this year.

December’s retail sales growth — an important gauge of consumer spending — begs the analyst to delve deeply into the details in order to gain an understanding of the health of the American consumer; the results do not immediately suggest that the U.S. economy ended the year on a strong note. The Department of Commerce reported Tuesday that retail sales rose 0.2 percent in the last month of 2013, with Americans shopping more frequently online and eating out more often. That 0.2 percent gain may seem small, but it did beat the expectations of analysts who had predict sales would be flat with November.

More importantly, the core measure — which excludes volatile spending on autos, gas and building supplies — increased a solid 0.7 percent. Economists believe that figure is a better proxy for Americans’ confidence in the economy because it does not include those volatile categories. Americans spent $431.9 billion on retail purchases and food services in December, an increase of 4.1 percent from the same month of 2012.

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