Low December Retail Sales Could Signal An Economic Slowdown

A “shocking” drop in holiday-season purchases worries some experts.

By Alexandra Hart & Kristen CabreraFebruary 15, 2019 1:39 pm

In December 2018, monthly retail sales dropped to nearly a decade low, and it could be one signal that the economy is slowing down.

John Diamond, director of the Center for Public Finance at Rice University’s Baker Institute for Public Policy, says the numbers are “shocking,” especially for a holiday season.

Sales from retail, restaurants and online merchants fell 1.2 percent between November and December. Diamond says the government shutdown, along with a decline in the stock market, probably affected sales.

Despite the drastic drop, Diamond says it doesn’t necessarily indicate the start of a recession, at least not yet.

“If you put these numbers in perspective, it looks like a slowdown maybe,” Diamond says. “I don’t really foresee it for any time in 2019. It does make a recession in 2020 a little more likely.”

But a recent report from the Federal Reserve Bank of New York shows a record 9 million Americans are at least 90 days behind on their car payments. Diamond says these two reports, together, indicate that there’s greater potential for a recession in the near future.

“Any time you have two or three factors all pointing in the same direction, it definitely strengthens the case that maybe a recession is closer than we think,” Diamond says.

Written by Sol Chase.