Consumers kept on spending in December, providing more signs that the economy is continuing to grow and le𓆉ss optimism that the Federal Reserve will be able to cut interest rates this spring.

U.S. retail sales were $709.9 billion in December, up 0.6% compared with November’s sales, and were 5.6% higher than the same time in the prior year, according to the Census Bureau’s monthly retail sales report. 

The results were better than expected, with analysts forecasting a more modest increase of 0.4%, compared with November’s increase of 0.3% compared to the prior month. It follows November’s better-than-expected report. 

“With a still solid labor market, lower gasoline prices, and interest rates edging lower, December retail sales reflect an economy that,🦩 although slowing, continues to be underpinned by consumer spending,” said Quincy Krosby, LPL Financial chief global strategist.

Spending Gr♏owth Lowers Fed Rate Cuts Expectations

While th♚e spendiꦐng may be good for the economy, it also could delay Federal Reserve action on interest rate cuts, as increased spending can help drive inflation higher.

Investors have very little faith that the Fed will cut its rate at this month's meeting with 2.6% change of a rate cut, according to 澳洲幸运5官方开奖结果体彩网:CME's Fed Watch tool which uses 🉐the prices of fed funds futures contracts to determine the probability of a rate change.

Wednesday's report also gives more early indications of the holiday shopping season results, as retail sales from October 2023 through December 2023 were 3.9% higher than the same period last year. One report has already shown that 澳洲幸运5官方开奖结果体彩网:online shopping was 4.9% higher for the 2023 holiday season, defined as sales in November and December.