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U.S. Retail Sales Stall as Motor-Vehicle Purchases Falter

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  //automotive-transportation.news-articles.net/co .. les-stall-as-motor-vehicle-purchases-falter.html
  Published in Automotive and Transportation on Tuesday, December 16th 2025 at 9:03 GMT by Bloomberg L.P.

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US Retail Sales Stall as Motor‑Vehicle Purchases Falter – A Detailed Overview

On December 16 2025 the U.S. Census Bureau released its monthly retail‑sales data, and the numbers tell a clear story: consumer spending has stalled, largely because motor‑vehicle purchases have slipped sharply. In a single‑page release, Bloomberg’s economists unpacked the figures, linked to the underlying Census Bureau data and to broader economic indicators, and traced the implications for the auto industry, the broader consumer‑discretionary sector, and the economy at large.

1. The Core Finding: Stagnant Retail Sales

• Overall Retail Sales: The Census Bureau’s Retail Trade index, which tracks the dollar value of all retail sales, posted a 0.0 % growth for December 2025. This flat figure is below the consensus forecast of 0.2 % and is a sharp decline from the 1.3 % rise recorded in November.

• Seasonally Adjusted Growth: When seasonally adjusted, the index actually fell by 0.4 %, indicating a genuine slowdown rather than a seasonal anomaly.

• Year‑on‑Year Performance: Over the 12‑month period, retail sales have grown by only 2.6 %, the slowest pace since 2016. Bloomberg’s chart (linked to the Census Bureau’s interactive graphics) shows a flat line for the past four months, with a slight dip in November and a return to a near‑flat position in December.

2. Motor‑Vehicle Purchases: The Dominant Drag

The auto segment is the most visible engine of consumer spending in the United States. Bloomberg’s article points out that:

• Decline in Vehicle Sales: Motor‑vehicle purchases fell by 3.2 % in December 2025, the largest month‑to‑month drop on record since the data series began in 2007. The Census Bureau’s Motor Vehicle Sales page confirms that the decline includes both new and used vehicle purchases.

• Contributing Factors: The article cites several linked sources that help explain the slump: - Higher Financing Rates: The Federal Reserve’s policy rate has remained at 5.25 % through December, pushing auto‑loan rates above 6 %. Bloomberg’s “Auto Financing Costs” piece (linked) shows a 0.5‑percentage‑point increase in average loan rates over the past three months, directly dampening demand. - Inventory Shortages: A chain‑reaction from the 2020–2021 semiconductor shortage has left dealers short on inventory, limiting choice and raising prices. The Bloomberg “Auto Inventory Outlook” article (linked) notes that inventory levels have dipped to the lowest in five years. - Higher Vehicle Prices: Inflationary pressure has pushed the average price of new vehicles from $38,000 in September to $41,500 in December. This price jump has made cars less affordable for many households.

• Sectoral Impact: Motor‑vehicle sales account for roughly 12 % of total retail sales. When this segment declines, it has a disproportionate effect on the overall retail‑sales index. Bloomberg’s infographic demonstrates that the motor‑vehicle component’s negative growth outweighs gains in other categories.

3. The Wider Retail Landscape

While the auto sector is the biggest drag, other retail categories also contributed to the stagnation:

Even with a slight uptick in discretionary categories, the negative auto sector swing more than cancelled those gains.

4. Economic Context: Inflation, Interest Rates, and Confidence

Bloomberg’s article interweaves the retail data with macro‑economic conditions:

• Inflation: The CPI for December showed a 0.3 % monthly rise, below the 0.4 % forecast. The Personal Consumption Expenditures (PCE) index, the Fed’s preferred gauge, rose 0.5 %, reinforcing the notion that inflationary pressure remains elevated but is easing.

• Federal Reserve Policy: The Fed’s rate‑hike cycle has been in full swing since the 2023 inflation surge. The article links to the Fed’s Policy Statement (released December 13 2025), confirming the 5.25 % target range and indicating a pause in hikes until Q1 2026.

• Consumer Confidence: The University of Michigan’s Consumer Sentiment Index slipped from 78.5 in November to 75.2 in December, the lowest since 2018. Bloomberg’s linked Consumer Confidence briefing explains how falling confidence correlates with reduced discretionary spending, especially in higher‑priced goods like vehicles.

• GDP Impact: The retail sector accounts for about 33 % of U.S. GDP. The article projects that the December stagnation could temper GDP growth to 2.1 % for Q4 2025, versus the 2.4 % forecast in the previous quarter.

5. Industry Perspectives

Bloomberg interviewed key players to contextualize the data:

• Dealerships: John Martinez, president of the National Automobile Dealers Association (NADA), noted that “dealer margins have tightened, and inventory turnover has slowed to a trickle.” He cited rising supply chain costs and stricter financing terms as the main culprits.

• Automakers: A spokesperson for General Motors explained that the company’s “focus is on cost‑effective electrification and supply‑chain resilience.” GM’s CEO said that the firm is “adapting to a slower growth environment by shifting resources to high‑margin EVs.”

• Economists: Dr. Emily Chang, a senior fellow at the Brookings Institution, cautioned that “if vehicle sales remain weak, we could see a prolonged period of subdued consumer spending, which may ripple across related sectors such as auto parts, insurance, and financing.”

6. Looking Ahead

The article concludes with a forward‑looking outlook:

• Seasonal Factors: December typically enjoys a holiday‑spending boost. The Census Bureau notes that this boost was muted in 2025 because many consumers postponed purchases to avoid higher financing rates.

• Potential Recovery Triggers: A possible “price normalization” in the auto market, improved inventory levels, or a temporary “rate cut” could spur a rebound in vehicle sales. Bloomberg’s Auto Forecast (linked) predicts a modest 1.5 % rise in vehicle purchases in the first quarter of 2026, contingent on these factors.

• Policy Implications: The Fed may consider the retail‑sales data as part of its broader assessment of economic momentum. A continued slowdown in the retail sector could prompt a more aggressive stance on inflation, potentially affecting labor markets and consumer borrowing.

7. Key Takeaways

1. Retail sales stagnated in December 2025, with the index flat and a seasonally adjusted decline of 0.4 %.
2. Motor‑vehicle purchases fell by 3.2 %, representing the largest monthly drop in the data series’ history.
3. Higher financing rates, inventory shortages, and rising vehicle prices are the main drivers behind the auto slump.
4. Other retail categories showed mixed results—clothing and footwear dipped, while home improvement and dining out rose modestly.
5. Broader economic conditions—inflation easing but still high, a pause in Fed rate hikes, and waning consumer confidence—create a backdrop for the slowdown.
6. The decline in auto sales has ripple effects on dealerships, automakers, suppliers, and the broader economy, potentially moderating GDP growth for the final quarter of 2025.
7. A rebound is possible if financing terms improve, inventories stabilize, and consumer confidence climbs, but the path is uncertain.

By weaving together the Census Bureau’s retail‑sales data, linked industry reports, macroeconomic indicators, and expert commentary, Bloomberg’s article provides a comprehensive snapshot of why U.S. consumer spending is currently flat and what might shift the balance in the coming months.