Strong December Retail Data Challenges Fed's Rate Cut Timeline

December’s retail sales data painted a picture of resilient U.S. consumer spending, with a 0.4% overall increase and a notable 0.7% jump in core retail sales. The strength was broad-based, with significant gains in auto dealerships (0.7%), furniture stores (2.3%), and sporting goods retailers (2.6%). This robust performance, combined with December’s strong employment figures showing a 4.1% unemployment rate, has prompted economists to revise their Q4 GDP growth estimates upward to nearly match Q3’s 3.1% pace. The data suggests that wage growth continues to drive consumer spending, potentially complicating the Federal Reserve’s considerations for interest rate cuts in 2024.



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