#USRetailSalesMissForecast
The data revealed that consumer spending was significantly weaker than expected, signaling a potential cooling of the U.S. economy.
The Key Numbers
The report, which covers data for December 2025 (delayed due to a 43-day government shutdown late last year), showed a "flatline" in consumer activity:
Metric Actual Forecast (Estimate)
Retail Sales (MoM) 0.0% +0.4%
Core Retail Sales (ex. autos/gas) 0.0% +0.4%
Retail Control Group -0.1% +0.4%
Why It Happened
Economists point to several factors that have finally "tapped out" the American shopper:
Cost Pressures: Inflation (CPI at 2.7%) is currently outpacing sales growth (2.4% YoY), meaning people are paying more for fewer goods.
Depleted Savings: The personal saving rate fell to a three-year low of 3.5%.
Sector Declines: High-interest rates and economic uncertainty led to sharp pullbacks in "wants" like furniture (-0.9%) and electronics (-0.4%), though "needs" like building materials (+1.2%) saw slight gains.
Market Significance
While a "miss" sounds negative, the market reaction has been mixed:
Interest Rates: The weak data bolstered hopes that the Federal Reserve will cut interest rates sooner to prevent a recession.
Stock Market: Major indices like the S&P 500 stayed near record highs as investors prioritized the prospect of cheaper borrowing costs over the news of slow spending.
Bond Yields: The 10-year Treasury yield dropped to around 4.13% as traders shifted into "dovish" expectations.
The focus now shifts to the Non-Farm Payrolls (jobs report) and upcoming inflation data to see if this stagnation is a one-time holiday hangover or a broader trend for 2026.