Business and Finance

Early reports from stores on the holiday shopping season looked good. But it turns out retail sales actually fell in December, leaving economists scratching their heads about the state of the recovery.

Sales dropped 0.3 percent from November, mostly because people spent less on cars and appliances, the government said Thursday. For the year, sales fell 6.2 percent. Economists said the monthly decline could just be a blip and suggested looking at the past two months together, which would show spending rising modestly. But with unemployment high and credit tight, the report shows the recovery remains tentative.

"I wasn’t expecting this. It’s a bit of a puzzle," said Scott Hoyt, senior director of consumer economics at Moody’s Economy.com. "Consumer spending is growing very weakly, but the key thing is that it’s growing."

Retail sales have now fallen two years in a row. The decline in 2008 was much smaller, 0.5 percent. They are the only two years sales have fallen since the government started keeping records in 1992 bad credit unsecured personal loans.

For December, there was a 0.8 percent decline in auto sales, even as automakers report higher sales. That could be because fewer luxury cars were sold and automakers offered more incentives, said Jeff Schuster, executive director of automotive forecasting for J.D. Power.

The next few months still look scary for retailers. Stores are finding shoppers have little reason to buy now that the holidays have passed. January sales are off to a weaker-than-expected start, according to the International Council of Shopping Centers.

People "don’t see the best in front of them," said Eric Bender, retail analyst at Brean Murray, Carret & Co. "There is a tremendous amount of uncertainty."

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