December retail sales were 0.4 percent lower than November, according to the U.S. Commerce Department. The numbers caught some economists off guard — they go against the maxim that December is the busiest month of the year in retail, although I doubt anyone who works directly with retail was surprised. As I reported in November, shoppers were doing Christmas shopping earlier than ever in 2007 and Black Friday would be the midpoint, not the nominal starting point, of the holiday shopping season.
Those who don’t realize that consumers intentionally did their holiday shopping more than a week earlier this year may overreact to the December retail reports. When you look at the history of U.S. retail, a decline from November to December certainly looks like a decline in consumer sentiment. There is certainly a note of caution in recent consumer spending statistics. Two of the most telling indicators are the high sales of gift certificates and slow spending on them, a sign that gift givers and recipients wanted to be especially sure that their money was not spent frivolously. With other indicators already pointing downward for more than a year, a slowdown in economic activity is a safe prediction. But it’s important not to overreact to a December retail report that mainly reflects Christmas shopping that was a little earlier in the season than it used to be.