Retail Sales Research Brief

More affluent households behind growth. Core retail sales rose 4.2 percent during the first 11 months of last year compared to the same period in 2024, reflecting consumer resiliency in the face of sweeping economic policies, a slowing labor market, and a government shutdown. When accounting for core CPI inflation, spending also rose 0.2 percent in November. While encouraging, retail sales growth has become dependent on higher-earning households. A Bank of America Institute report found that spending among consumers in the top third of the income distribution rose 4 percent in November on an annual basis compared with a 1 percent increase among households in the lowest third of the income distribution. Fortunately, the impact of tariffs on inflation is expected to ease in the second half of 2026 due to favorable base effects. This, along with still-firm wage growth that was up 3.8 percent annually in December, should provide some cautious optimism about near-term economic conditions.