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Weekly economic review & outlook Retail spending slumps to end 2020

January 19, 2021

You Need to Know

Week in review

Further weakness in retail spending during December

Retail sales dropped again at the end of 2020, highlighting the current softer trend for the recovery as COVID cases spike.

Faster inflation with gasoline prices up

The consumer price index (CPI) climbed by 0.4 percent in December, although inflation was weaker overall during 2020 due to the COVID recession.

Week Ahead

Forecasts

Housing starts should rise again

After a very strong month for building permits in November, housing starts are expected to rise again, possibly matching January for the fastest pace since 2006.

Existing home sales expected to fall but remain strong

The most recent jump in coronavirus infections and another record low for homes for sale are expected to contribute to a decline in the pace of existing home sales, as indicated by fewer pending home sales.

Retail sales dropped by 0.7 percent for December, the third consecutive month of decline, as consumers avoided in-person activity with COVID cases at record levels. Moreover, there were downward revisions to previous months as overall consumer activity slowed sharply in the fourth quarter, in part due to steadily increased government restrictions in response to the jump in infections. Even so, retail sales were still up by 2.9 percent from a year earlier on the back of the post-lockdown surge in spending over the May-September period.

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