US Retail Sales YoY for December 2025: Moderating Growth Amid Mixed Signals
Key Takeaways: December 2025 US Retail Sales YoY rose 3.30%, slightly below the 3.50% recorded in November and above the 3.00% consensus estimate. This marks a moderation from the strong mid-2025 peak of 5.20% in May, reflecting cooling consumer demand amid tighter monetary policy and persistent inflation pressures. The data suggests a cautiously optimistic consumer sector, with potential headwinds from geopolitical tensions and fiscal uncertainties.
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US Retail Sales YoY for December 2025 registered a 3.30% increase, down from November’s 3.50% but above the 3.00% consensus forecast, according to the latest release from the Sigmanomics database. This figure compares to a peak of 5.20% in May 2025 and a 12-month average of approximately 4.00%, indicating a deceleration in retail growth as the year closed.
Drivers this month
- Core retail categories such as electronics and apparel showed modest gains, contributing roughly 0.15 percentage points.
- Automotive sales softened, subtracting 0.10 percentage points from overall growth.
- Online retail continued steady expansion, adding 0.12 percentage points.
Geographic & Temporal Scope
The data covers the entire United States retail sector for December 2025, comparing year-over-year growth against December 2024. Month-over-month comparisons show a slight slowdown from November 2025’s 3.50% growth rate, while the 12-month trend reflects a gradual easing from the mid-year peak.
Retail sales growth remains a critical barometer of consumer health and overall economic momentum. The 3.30% YoY increase in December aligns with moderate consumer spending, supported by steady employment and wage growth but constrained by rising interest rates and inflationary pressures.
Monetary Policy & Financial Conditions
The Federal Reserve’s ongoing rate hikes throughout 2025 have tightened financial conditions, increasing borrowing costs for consumers. This has likely contributed to the deceleration in retail sales growth from the 5.20% peak in May to 3.30% in December. Inflation remains above the Fed’s 2% target, influencing cautious consumer behavior.
Fiscal Policy & Government Budget
Fiscal stimulus measures have waned since early 2025, with government spending growth slowing. Budget constraints and debates over debt ceilings have introduced uncertainty, potentially dampening consumer confidence and discretionary spending.
External Shocks & Geopolitical Risks
Global supply chain disruptions and geopolitical tensions, particularly in key trading regions, have pressured retail inventories and pricing. These factors may have restrained retail sales growth, especially in durable goods and imported products.
Market lens
Immediate reaction: The US dollar index (USD) strengthened 0.30% following the release, reflecting confidence in the resilience of consumer spending despite moderation. Short-term Treasury yields rose slightly, pricing in continued Fed tightening.
Policy pulse
The retail sales figure remains above the Fed’s inflation-adjusted growth target but below earlier 2025 highs. This supports a cautious approach to further rate hikes, balancing inflation control with growth preservation.
This chart highlights a clear deceleration in retail sales growth since mid-2025, trending downward but remaining positive. The data suggests consumers are resilient but increasingly sensitive to financial conditions and external risks.
Looking ahead, retail sales growth faces a mixed outlook. Bullish scenarios (30% probability) envision easing inflation and stable employment driving a rebound to 4.00%+ YoY growth by mid-2026. The base case (50%) expects continued moderate growth near 3.00-3.50%, reflecting persistent but manageable headwinds. Bearish outcomes (20%) involve sharper slowdowns below 2.50%, triggered by aggressive Fed tightening, fiscal contraction, or worsening geopolitical tensions.
Structural & Long-Run Trends
Long-term shifts toward e-commerce and changing consumer preferences continue to reshape retail dynamics. While brick-and-mortar sales face challenges, online retail growth remains robust, partially offsetting broader sector softness. Demographic changes and technological adoption will influence future retail trajectories.
December 2025’s US Retail Sales YoY growth of 3.30% signals a consumer sector navigating a complex environment. While growth has slowed from earlier peaks, it remains positive amid tightening monetary policy and external uncertainties. Policymakers and market participants should monitor inflation trends, fiscal developments, and geopolitical risks closely, as these will shape consumer spending and broader economic momentum in 2026.
Key Markets Likely to React to Retail Sales YoY
Retail sales data is a key driver for several markets, influencing currency strength, equity valuations, and bond yields. Traders and investors watch this indicator closely for clues on consumer health and monetary policy direction.
- USDJPY – Sensitive to US economic data; retail sales strength often boosts USD against JPY.
- SPX – S&P 500 index, reflecting broad US equity market sentiment tied to consumer spending.
- EURUSD – Major currency pair reacting to US retail data and Fed policy expectations.
- BTCUSD – Bitcoin often moves on risk sentiment shifts linked to economic data.
- TSLA – Consumer discretionary stock sensitive to retail trends and consumer confidence.
Since 2020, US Retail Sales YoY growth has shown a positive correlation with the SPX. Periods of accelerating retail sales often coincide with upward trends in the S&P 500, reflecting investor confidence in consumer-driven growth. Conversely, sharp slowdowns in retail sales have preceded equity market corrections.
FAQs
- What does the US Retail Sales YoY figure indicate?
- The US Retail Sales YoY measures the annual percentage change in retail sales, reflecting consumer spending trends and economic health.
- How does retail sales data affect monetary policy?
- Stronger retail sales can signal robust economic activity, potentially prompting the Federal Reserve to tighten monetary policy to control inflation.
- Why is December 2025’s retail sales growth important?
- December’s data captures holiday season consumer behavior and sets the tone for early 2026 economic momentum and policy decisions.
In summary, December 2025’s retail sales growth reflects a resilient but cautious US consumer. The moderation from mid-year highs underscores the balancing act between inflation pressures and spending power. Monitoring upcoming data releases and policy signals will be crucial for anticipating the trajectory of consumer demand and broader economic growth.
December 2025’s retail sales YoY growth of 3.30% contrasts with November’s 3.50% and the 12-month average of 4.00%. This marks a clear moderation from the strong 5.20% peak in May 2025. Month-over-month, the data signals a slowing but still positive consumer spending environment.
Historical comparisons show a steady decline from the summer months, with August and September both registering near 3.90% and 5.00% respectively. The downward trend suggests consumers are adjusting to tighter credit and inflationary pressures.