The United States Commerce Department recently reported that December retail sales fell by a seasonally adjusted 0.9 percent from a month earlier, which represents the largest monthly decline since January of last year.
However, several economists are attributing this decline to falling oil prices. According to MarketWatch, the cost of crude oil fell by 20 percent in December, causing sales of gasoline to decline as well. Significantly, gasoline sales contribute about 10 percent to overall retail sales, so excluding that factor the drop in December retail sales was not so drastic.
"You certainly want to look past the headline number because it will be considerably lower as a result of the decline in spending at the pump, which simply represents a fall in gasoline prices," economist Michelle Meyer told Bloomberg. She went on to say that as a whole, the December spending report would "send a healthy signal for the consumer that's consistent with our view that consumer spending will improve throughout this year."
Consumers are expected to increase their spending as a result of lower gas prices, but this change will likely occur over a longer period of time, which is why it wasn't reflected in the December sales results. Meyer pointed out that Americans haven't had the amount of time necessary to adjust their spending habits enough to offset the fallen gasoline prices, but that we'll see this result eventually reflected in the overall year's retail sales figures.
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