U.S. retail spending in December hit lows not seen since 2009. Friday’s report sent the Dow Jones industrial average plunging more than 450 points by midday and closing the day down 391 points, a 2.39 percent drop.
Eight years of Quantitative Easing by the Federal Reserve has done little to spur consumers into action. Instead, they appear to be putting extra cash into savings. Purchases rose 2.1 percent in 2015, the smallest growth in seven years.
“The consumers aren’t spending. All these predictions, everyone keeps saying, ‘Oh, wait. They’re going to this, they’re going to do that. They’re not. The only areas that were up every year were sporting goods, music and books,” said Bloomberg News‘ Shannon Pettypiece on Friday.
Thomas Simons, a money-market economist at Jefferies Group LLC in New York, agreed.
“There isn’t anything encouraging in this report. It’s very disappointing. The labor market is in good shape, which suggests the outlook is probably better than this,” Simons said.
The retail sales report showed six of 13 major categories declined in demand in December from the prior month, Bloomberg reported. A 1 percent slump at general merchandise stores was the largest since February.
The report came in conjunction with news that Walmart, the world’s largest retailer, will close 269 stores beginning in February.
“Actively managing our portfolio of assets is essential to maintaining a healthy business,” Walmart CEO Doug McMillon said in a statement. “Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future.”
Walmart earnings for the fiscal year will be down as much as 12 percent, the Associated Press reported Friday. The Bentonville, Arkansas, company said 154 locations will be in the U.S.
Friday’s retail news coincided with a drop in the Dow of approximately 469 points as of midday, or 2.86 percent, to 15,906.
The White House, which usually does not comment on market fluctuations, saw fit to do so on Friday’s performance. White House spokesman Josh Earnest said the market was being “closely watched at the Treasury Department.”
“Simply put, we’re not talking about a wall of worry right now. We’re talking about a mountain,” Ryan Larson, head of equity trading, U.S., RBC Global Asset Management (U.S.), told CNBC on Friday.
WND reported on Wednesday that much of the volatility in the market is due to the world’s reaction to the end of “easy money” prolonged by the Federal Reserve’s buying of U.S. Treasury debt.
The Royal Bank of Scotland warned 2016 would be a “cataclysmic year” for investors and told them to “sell everything except high quality bonds,” CNN reported Wednesday.
“We think investors should be afraid,” said RBS analyst Andrew Roberts said.