Retail Spending Slows, Small Business Confidence Drops

December retail sales stayed flat month‑to‑month, a sharp fall from the expected rise after November’s rebound. The drop marks the slowest year‑over‑year growth since September 2024. Motor vehicle and clothing purchases fell the most, while spending on building materials and food & beverage grew the most. Core retail sales also held steady, missing a modest 0. 4 % increase that analysts had hoped for. The control group, which feeds into the GDP calculation, slipped 0. 1 % this month—well below the 0. 4 % it was projected to gain. This suggests that overall economic activity may be cooling more than previously thought.Adjusted real retail sales, which account for price changes, actually fell year‑over‑year in December. This could mean that consumers are buying less even when prices are considered. Despite the weak data, some experts think seasonality and smoothing effects might explain part of the slowdown. Still, the pattern raises questions about whether consumer confidence is truly recovering. In January, small‑business owners reported a slight dip in optimism for the first time in three months. The NFIB Optimism Index fell 0. 2 points to 99. 3, with most of its ten components decreasing. The biggest concerns for small firms remain taxes and labor quality, according to the latest survey. These issues could weigh on future spending and hiring decisions.