Americans kept their shopping flat in December, as wage growth cooled

By Bryan Mena, Alicia Wallace, CNN

Washington (CNN) — The US economy’s engine may be starting to sputter, as Americans’ paychecks lose steam and their debt becomes even more unwieldy, new data showed Tuesday.

Retail sales were unexpectedly flat in the crucial holiday month of December, the Commerce Department said, after they rose a solid 0.6% in November and well below the 0.4% gain economists predicted in a FactSet poll.

At the same time, in the fourth quarter, Americans’ wages grew at the weakest pace in more than four years, according to a separate report out Tuesday.

Taken together, the data suggest that the world’s largest economy might have ended last year on shaky footing in the face of an ongoing affordability crisis. Still, economists widely expect bigger tax returns and the string of interest-rate cuts the Federal Reserve delivered last year to help growth this year.

December’s retail-sales figures, delayed because of last year’s government shutdown, came as Americans’ pay gains slowed to the weakest pace in more than four years, according to a separate report released Tuesday from the Bureau of Labor Statistics. The Employment Cost Index, which measures changes in wages and benefits, rose 0.7% during the last three months of 2025, marking the slowest increase since the second quarter of 2021, BLS data showed.

Over the past year, hiring in the United States has slowed to a crawl, people’s feelings about the economy have crumbled and inflation has remained stubbornly elevated.

The latest data underscores how US consumers have been under pressure in recent months, especially those on the lower end of the income spectrum.

Well-to-do households are seeing their wealth increase and are powering spending, while lower- and middle-income households are experiencing increased strain. Economists have called this dynamic the K-shaped, two-lane or windchill economy.

Retail sales, which are adjusted for seasonal swings but not inflation, declined across most of the categories tracked by the Commerce Department, falling the most at furniture stores and at specialized, niche stores, such as florists — both declining by 0.9%. Meanwhile, retail spending edged higher in a handful of categories, rising the most at home improvement stores (1.2%.)

A measure that strips out volatile sales — such as of building materials and gasoline — and gives a better indication of underlying demand fell 0.1% in December, according to FactSet, well below the 0.4% advance economists had predicted.

The release of the January retail sales report is “to be determined,” according to the Commerce Department, after last year’s government shutdown — and the brief one last week — disrupted the department’s operations. The January retail sales reading is typically released in mid-February.

This story is developing and will be updated.

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