Retail sales were less robust in December than suggested by the momentum earlier in the holiday shopping season. Total retail sales, seasonally adjusted, rose 0.1 percent from November, and core sales, which exclude vehicles and gasoline, were flat. Sales of building materials led the way, increasing by 1.6 percent, while sales of electronics and appliances tumbled 3.9 percent, influenced by diminishing sales of the iPhone. Looking at November and December data combined, core sales rose 5.6 percent from a year ago, down slightly from the 5.8 percent increase registered in last year’s holiday shopping season. In a separate survey, chain store sales increased 3.3 percent in November and December compared with the same period in 2010, down slightly from last year’s gain of 3.8 percent. These increases, respectable but modest, are a reminder of the headwinds that continue to weigh down consumer spending, which include weak income growth, high unemployment, the ongoing decline in home prices, and continued deleveraging. But they also portray a consumer that will respond to promotional pricing to satisfy pent-up demand. With consumer spending accounting for 70 percent of gross domestic product, the economy is expected to log another year of modest growth with a near-term recession unlikely. The numbers also signal continued, slow improvement in shopping center leasing market fundamentals.
Robert Bach
Senior Vice President, Chief Economist
Grubb & Ellis
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