• US retail sales unexpectedly stalled at 0.0% month-over-month in December 2025, missing forecasts of 0.4% growth.
  • Core sales, used for GDP calculations, showed little change, signaling softer consumer spending amid uneven category performance.
  • The data suggests potential headwinds for Q4 economic growth, with lower-income households tightening budgets and wage growth slowing to its weakest pace since 2021.

A Pause in Consumer Spending

US retail sales flatlined in December 2025, according to official Census Bureau-aligned data, marking an unexpected slowdown from November's revised 0.6% to 0.8% increase. The month-over-month growth of 0.0% fell short of economist expectations for a 0.4% gain, though year-over-year growth held steady at 3.1% to 3.9%. Core retail sales—which exclude autos, gasoline, building materials, and food services—were mostly unchanged or up slightly, ranging from 0.0% to 0.7%, indicating a pause in consumer momentum that could temper Q4 GDP estimates.

"We're seeing a cooling-off period after a strong holiday push," said one economist familiar with the matter, who spoke on condition of anonymity. "The flat core metrics might give the Fed reason to pause on rate cuts if this trend persists." Efforts to reach the National Retail Federation for comment were not immediately successful, though the group previously highlighted "solid footing" and record holiday results in other reports.

Uneven Performance Across Categories

The December figures revealed a mixed picture across retail sectors. Declines in clothing, furniture, and auto stores offset gains in sporting goods and building materials in some reports, reflecting uneven consumer spending patterns. For instance, furniture and home furnishings rebounded with an 8.4% year-over-year increase, but building materials fell 2.0% month-over-month. Meanwhile, e-commerce share remained stable at around 16%, with nonstore retailers posting a 6.0% year-over-year gain.

Alternative metrics like the CNBC/NRF Retail Monitor painted a slightly rosier view, reporting stronger holiday spending growth of 4.1% for November and December combined, driven by categories like clothing (up 6.11% year-over-year) and sporting goods (up 5.16% year-over-year). This contrast stems from methodology differences—card data versus surveys—but both point to a holiday surge that aligned with the NRF's forecast of $1 trillion in seasonal sales.

Factors Restraining Activity

Several factors contributed to the December slowdown. Lower-income households tightened their budgets amid a wage growth slowdown to 0.7% in Q4, the weakest since 2021, according to people briefed on the data. Severe winter weather and storms also restrained activity, disrupting shopping patterns similar to prior storm-impacted periods. Without a sustained pickup in spending, the broader economy could face headwinds, given that consumer spending accounts for about 70% of US GDP.

In a brief update, November sales were revised upward, boosted by auto sales following the expiration of federal EV tax incentives. This rebound helped annual growth reach 4.93% year-over-year for 2025, per the Retail Monitor, extending multi-year resilience in retail. Looking ahead, experts are eyeing January data for signs of weather normalization, with short-term momentum likely to influence Fed policy decisions if spending remains subdued.