US Retail Sales Flat in December as Wage Growth Slows; Core PCE Remains High

Retail sales in December declined 0.1% after adjusting for seasonal factors, beating a FactSet forecast of 0.4%, with the largest drops seen in furniture and florist categories. Core retail sales, which strip out volatile items like gasoline and building materials, also fell 0.1%, while a core measure of underlying demand dipped 0.1%. In the fourth quarter, the Employment Cost Index, a gauge of wages and benefits, rose 0.7%, the weakest pace in over four years. Annual hiring has slowed, inflation remains elevated, and consumer confidence has eroded, particularly among lower- and middle-income households. Well-off households continue to drive some spending, while broader affordability pressures weigh on overall demand. The January retail sales report, typically released in mid-February, is pending due to the government shutdown.