American shoppers, eager to take maximum advantage of low borrowing costs, continued through December to pursue high-ticket purchases - despite an uncertain business climate, hefty personal debt burdens and a glum employment market.
The compulsive urge to spend, spend, spend boosted overall retail sales last month to a level 1.4% above December 2001, although if auto sales (+5%) are excluded from the equation, the retail market was virtually static. The uplift, reported by the Commerce Department, follows November’s unexpectedly favorable 0.9% gain.
Restaurants, bars and clothing outlets all enjoyed robust growth, although this was negated by declines elsewhere, notably among grocery and home-improvement stores.
This flat showing, auto sales excepted, was partially explained by a (probably) temporary shift of purchasing power toward cars. However, the report fuelled fears as to whether consumer spending growth might be on the cusp of a downward curve.
December also saw the dollar sag to a new three-year low against the euro, while in the first half of the month stock prices and bond yields fell only to recover later, thanks to the Pangloss proposition which holds that however bad the conditions, they will eventually improve.
Data sourced from: Financial Times; additional content by WARC staff