U.S. retail sales declined by 0.88% month-over-month (m/m) in January 2025 (+4.2% year-over-year (y/y)) on a nominal basis. However, it is important to note that Census data at the end and beginning of the year can be distorted due to seasonal adjustments in recent years. Therefore, a more accurate assessment would be to compare the total for two months (Dec 2024 - Jan 2025) against November 2024, as well as the same periods in previous years.
Monthly Retail Sales Performance
In 2025, the last two months (Dec 2024 - Jan 2025) declined by 0.17% relative to November 2024, compared to a 0.35% decline in Jan 2024, a 3% increase in Jan 2023, a 1% increase in Jan 2022, and a 4.8% rise in Jan 2021. However, retail dynamics during 2022 - 2023 were significantly affected by record inflationary outliers and extensive fiscal stimulus.
That said, weak sales data at the beginning of the year does not always indicate a negative trend for the rest of the year, as demand gradually recovered from 2023 - 2024. If we evaluate retail demand over the last six months (Aug 2024 - Jan 2025), growth stood at:
- +3.3% y/y;
- +6.44% over two years;
- +14.4% over three years;
- +38.1% over five years.
However, when adjusted for inflation, the real growth rates are:
- +3.8% y/y;
- +6.8% over two years;
- +7.6% over three years;
- +21.3% over five years.
For comparison, the average annual growth rate from 2010 to 2019 was 4.1%.
Key Contributors to Retail Sales Growth
Which segments contributed to retail sales growth over the last six months compared to a year earlier?
- 34% of the growth came from online stores;
- 26.3% from cars and auto components;
- 16.7% from catering;
- 9.8% of food sales;
- 9.6% from shopping centers with a wide range of goods.
In total, nearly 97% of retail sales growth was driven by these five sectors, which collectively account for over 72% of total retail sales.
Conclusion
It is too early to determine whether U.S. retail sales expansion is stalling. Overall, demand remains strong and resilient. A prolonged period of weak data — at least six months — with an annualized trend falling to 3.8% - 4.2% or lower would be needed to confirm a significant slowdown.