The numbers: Sales at U.S. retailers such as Target and WalMart dropped 1.9% in the final month of 2021, as omicron spread like wildfire and shoppers confronted higher prices due to soaring inflation.
Economists polled by The Wall Street Journal had forecast a 0.1% decline in December.
If high inflation is taken into account, retail sales were even more sharply depressed in December.
Retail sales excluding auto dealers fell a sharper 2.3% last month, the government said Friday. Car sales tumbled last year after a shortage of computer chips knotted up production.
Retail sales are a big part of consumer spending and offer cues on the strength of the U.S. economy. Sales had risen sharply through most of last year before tapering off in the waning months.
Big picture: The economy suffered letdown toward the end of 2021 because of omicron. The highly contagious coronavirus strain has infected millions of people and force many to miss work.
Persistent shortages of supplies and the highest inflation in almost 40 years have also hurt. Customers can’t always find what they want and prices for many goods and services have risen sharply.
Households still have plenty of savings, however, and economists predict spending will improve if the pandemic finally starts to peter out and inflation gets brought under control.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
were set to decline in Friday trades. Stocks have been up and down for the past week.
