MW Retail sales fizzled at the end of the holiday season. Tariffs changed Americans' buying habits.

By Jeffry Bartash

Retail sales surged in the spring and summer and slowed in the final months of 2025

Retailers ended 2025 on a disappointing note.

Sales at U.S. retailers fizzled at the end of the holiday shopping season, suggesting consumers worried about the economy might be cutting back on spending as the new year got underway.

Retail sales were flat in December, the government said Tuesday in a report delayed by the federal shutdown last fall. The numbers are seasonally adjusted.

Fourth-quarter sales more broadly were also on the softer side compared with the prior two quarters.

Americans spent more money than they usually do in the spring and summer to avoid price increases tied to higher U.S. tariffs. It appears they scaled back purchases in the second half of the year to compensate.

Retail sales represent a large slice of consumer spending, the main pillar of growth for the U.S. economy.

In the 12 months that ended in December, retail sales increased a decent but below-trend 3.8% in unadjusted terms.

Key details: Home centers such as Home Depot $(HD)$ and Lowe's $(LOW)$ were the only retailers to post outsize sales in December. Outlays jumped 1.2%, the government said.

Sales fell at car dealers, clothing stores, pharmacies and big-box electronics retailers.

One of the most critical retail bellwethers, restaurants, saw a slight decline in sales in December.

People dine out more or buy more takeout when they are confident about the economy. They eat out less when they are anxious about their jobs.

Still, restaurant sales rose a solid 4.5% in the 12 months that ended in December, and they were fairly stable toward the end of the year.

Big picture: The economy grew faster than expected last year despite high tariffs, and consumers were the chief reason for that. They spent a lot of money: Purchases of goods and services easily rose faster than the rate of inflation.

Some of the spending was skewed, to be sure, by richer households that have seen a big increase in wealth due to soaring stocks and rising home values.

Middle- and lower-income Americans did not fare as well. They likely began holiday shopping early in a hunt for bargains, partly explaining why retail sales sputtered in the final month of the year.

"After a strong run, retail sales took a breather in December," chief economist Stephen Stanley of Santander Capital Markets said. "The overall Christmas season was good, but households shopped early."

Market reaction: The Dow Jones Industrial Average DJIA and S&P 500 SPX rose slightly in early Tuesday trading.

-Jeffry Bartash

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February 10, 2026 09:46 ET (14:46 GMT)

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