'Unbelievable': Retail sales collapsed by the most since 2009 in December

  • Retail sales fell by the most since 2009 in December.
  • That points to a dropoff in consumer spending, which accounts for more than two-thirds of economic activity.
  • The report was delayed by a five-week government shutdown that ended in January. 

Retail sales plummeted by the most in nine years in December, an unexpected drop that has fueled concerns about an economy driven by consumer spending. 

The Commerce Department said Thursday that retail sales sank 1.2% last month to $505.8 billion, marking the biggest drop since 2009, as receipts fell in nearly every major category. The results were well below economist expectations for a 0.1% increase. 

RELATED: Take a look at every retailer that filed for bankruptcy in 2018: 

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Every retailer who filed for bankruptcy in 2018
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Every retailer who filed for bankruptcy in 2018

A'gaci

Women's apparel and accessories retailer A'Gaci filed for Chapter 11 bankruptcy in January. 

Photo credit: Getty

Kiko USA

Cosmetics retailer Kiko USA Inc filed for Chapter 11 bankruptcy protection in January.

Photo credit: Getty

Tops Markets

Tops Markets operates 174 supermarkets — called Tops Friendly Markets. The company filed for bankruptcy protection in February.

Photo credit: Getty

The Bon-Ton Stores

The Bon-Ton Stores owns multiple department store chains including Bon-Ton, Bergner's, Boston Store, Carson's, Elder-Beerman, Herberger's, and Younkers. The company filed for bankruptcy in February.

Photo credit: Getty

Remington Outdoor

Remington filed for Chapter 11 bankruptcy protection in March.

Photo credit: Getty

The Walking Company

The shoe seller The Walking Company, which operates 208 stores in the US, filed for Chapter 11 bankruptcy protection in March.

Photo credit: Getty

Claire's

The jewelry chain Claire's filed for bankruptcy in March.

Photo credit: Getty

Southeastern Grocers

Southeastern Grocers, the parent company of the grocery chains Winn-Dixie, Harveys and Bi-Lo, filed for Chapter 11 bankruptcy protection in March.

Photo credit: AOL

Nine West

Nine West Holdings filed for bankruptcy in April.

Photo credit: Getty

Bertucci's

Italian casual-dining chain Bertucci's filed for Chapter 11 bankruptcy protection in April.

Photo credit: AOL

Rockport

The footwear brand filed for Chapter 11 bankruptcy protection in May.

Photo credit: Getty

National Stores

The owner of the Fallas chain of discount stores filed for bankruptcy in August.

Photo credit: Facebook

Brookstone

Brookstone filed for Chapter 11 bankruptcy protection in August.

Photo credit: Getty

Samuels Jewelers

Samuels Jewelers filed for Chapter 11 with an agreement for bankruptcy financing in August.

Photo credit: Facebook

Toys R Us

Toys R Us filed for bankruptcy in September.

Photo credit: Getty

Mattress Firm

Mattress Firm filed for bankruptcy in October.

Photo credit: PA

Sears

Sears filed for bankruptcy in October.

Photo credit: PA

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"In one line: Unbelievable," said Ian Shepherdson, chief economist at Pantheon Macroeconomics. "These numbers are astonishing, and impossible to square with the Redbook chain-store sales survey, which reported surging sales in December and a record high in the week of Christmas, on the back of the plunge in gasoline prices."

Excluding volatile categories including gasoline, cars and food, core retail sales dropped 1.7% in December. In November, they had risen 1%.

The decline points to sharply weaker consumer spending, which accounts for more than two-thirds of economic activity, even during the typically strong holiday season. 

The report had been delayed by the partial government shutdown that ended last month, which was the longest on record. The Commerce Department hasn’t yet announced when retail sales data for January will be released.

"These data are so wild that we have to expect hefty upward revisions, but if they stand, they are very unlikely to be representative of the trend over the next few months," Shepherdson said.

Economists estimate the economy grew 2.7% in the fourth quarter. While the shutdown that kept a fourth of federal agencies shuttered for five weeks was expected to slash billions from gross domestic product at the beginning of 2019, its effects on December retail sales appear muted.

“The shutdown was only reflected a scant amount in December so, unfortunately, this number arrived mostly on its own,” said Austan Goolsbee, who served as chairman of the Council of Economic Advisers during the Obama administration.

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