Americans cut back on retail spending last month as the holiday shopping season began amid high prices and rising interest rates that are forcing some families, particularly those with lower incomes, to cut back on what they buy.
The government said Thursday that retail sales fell 0.6% from November to December, after a sharp rise the previous month. Sales fell at furniture, electronics, and home and garden stores.
Inflation has been coming down but remains high and is eroding Americans' spending power. Consumer spending has been resilient ever since inflation first spiked almost 18 months ago, but Americans' ability to spend may be starting to erode.
Greater hiring, rising paychecks, and enhanced savings from government financial support during the pandemic have enabled many shoppers to keep up with rising prices. Yet many Americans are digging into their savings to keep up with inflation, which hit a four-decade high this summer and was 7.1% last month. The saving rate declined to its second-lowest level on record in October.
Americans are also putting more purchases on their credit cards. Total credit card debt jumped 15% in the July-September quarter, according to the Federal Reserve Bank of New York, the biggest jump in 20 years.
