Consumers Consumed Less in December: January 16 – 20

Americans shopped less and fewer purchased homes in December. Here are the five things we learned from U.S. economic data released during the week ending January 20.


Retail sales slumped as 2022 ended. The Census Bureau estimates retail and food services sales fell 1.1 percent in December to a seasonally adjusted $677.1 billion. Lower prices meant declining gas station sales (4.6 percent). (Note that the data series does not adjust for price changes). Net of gas stations and auto/parts dealers (-1.2 percent), core retail sales dropped 0.7 percent. Sales fell at retailers focused on furniture (-2.5 percent), electronics/appliances (-1.1 percent), health/personal care (-0.9 percent), and apparel (-0.3 percent). Sales also slumped at department stores (-6.6 percent), internet retailers (-1.1 percent), and restaurants/bars (-0.9 percent). Sales inched up at building material retailers (+0.3 percent), grocery stores (+0.1 percent), and sporting goods/hobby retailers (+0.1 percent). Retail sales totaled $8.123 trillion for all of 2022, 9.2 percent above the previous year.

Sales of previously owned homes slowed further in December. Existing home sales declined 1.5 percent to a seasonally adjusted 4.020 million units, a 12-year low. The National Association of Realtors notes that sales were 34.0 percent below year-ago levels, with huge percentage declines in all four Census regions. Inventories shrank 13.4 percent to 970,000 homes, the equivalent of a 2.9-month supply. The median sales price of $366,900 was up 2.3 percent from a year earlier. The press release blamed “limited inventory and high mortgage rates” for the sales drop, although it notes that rates “have markedly declined after peaking late last year.”

Housing starts continued falling in December. Housing starts declined 1.4 percent to a seasonally adjusted annualized rate (SAAR) of 1.382 million units. The Census Bureau measure was 21.8 percent below year-ago levels. Single-family home starts rose 11.3 percent, while starts for multi-family plummeted 18.9 percent. Looking towards the future, the annualized count of building permits dropped 1.6 percent to 1.330 million units. Permits fell 6.5 percent for single-family homes but gained 7.1 percent for multi-family units. Permits were down a startling 29.9 percent below year-ago levels. Housing completions slumped 8.4 percent to 1.411 million homes (+6.4 percent versus December 2021). 

Manufacturing production slumped in December. The Federal Reserve reports that manufacturing output slowed 1.3 percent on a seasonally adjusted basis after dropping 1.1 percent in November. Activity slowed for both durable (-1.1 percent) and nondurable (-1.5 percent) goods, respectively. Overall industrial production declined 0.7 percent in December following November’s 0.6 percent drop. Mining output fell 0.9 percent, while utilities output jumped 3.8 percent. Compared to a year earlier, manufacturing output was off 0.5 percent and industrial production was up 1.6 percent. 

Wholesale prices fell in December. The Producer Price Index (PPI) for final demand fell a seasonally adjusted 0.5 percent. This was the Bureau of Labor Statistics measure’s first drop since August. The core measure (net of energy, food, and trade services) inched up 0.1 percent, below November’s 0.3 percent gain. Goods prices fell 1.6 percent, pulled down by declines for energy (-7.9 percent) and food (-1.2 percent). Core goods wholesale prices (net of energy and food) increased 0.2 percent. Trade services PPI gained 0.3 percent (its biggest increase since August) even as trade services prices fell 0.2 percent. PPI has risen 6.2 percent over the past year, while core PPI has gained 4.6 percent.

Other U.S. economic data released over the past week:

  • Jobless Claims (Week ending January 14, 2023, First-Time Claims, seasonally adjusted): 190,000, -15,000 vs. the previous week, -50,000 vs. the same week a year earlier). 4-week moving average: 206,000 (-9.7% vs. the same week a year earlier). 
  • Housing Market Index (January 2023, Index (>50=More Homebuilders View the Housing Market as “Good” Than “Poor,” seasonally adjusted): 35 (vs. December 2022: 31; January 2022: 83). 
  • Business Inventories (November 2022, Manufacturers’ and Trade Inventories, seasonally adjusted): $2.477 trillion (+0.4% vs. October 2022, +15.1% vs. November 2021). 
  • Treasury International Capital Flows (November 2022, Net Foreign Purchases of U.S. Securities, not seasonally adjusted): +$140.6 billion (vs. October 2022: +$63.7 billion; vs. November 2021: +$103.8 billion). 
  • Beige Book

The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.

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