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By Jason Stipp and Robert Johnson, CFA | 01-16-2013 11:00 AM

A Different Kind of Holiday for Consumers

There were some unusual areas of strength in a decent overall holiday shopping season, says Morningstar's Bob Johnson.

Jason Stipp: I'm Jason Stipp for Morningstar. The retail sales report for December came in at a stronger-than-expected 0.5% growth. This was better than a lot of folks had expected, and it also resolved some disagreements between folks about how strong the holiday season was. Here to offer his insight on the report is Morningstar's Bob Johnson, our director of economic analysis.

Thanks for being here, Bob.

Bob Johnson: Great to be here.

Stipp: Let's talk first about the 0.5% growth in December. It was better than some folks thought. Some folks thought it was going to be really bad; recession-level-type of holiday season. This settles the score a little bit and shows us that it was stronger-than-thought, stronger-than-expected?

Johnson: Absolutely. First of all, let's look at the monthly numbers; December numbers, which compared with November, were up, 0.5%. Auto was a particularly strong category. So, stripping that out, which a lot of people like to do, we were up 0.3% month over month. So, that was a good number. People had thought without autos we might be as low as 0.1% in terms of retail sales growth. And the retail sector is so important to the economy and it's a good indicator of consumer spending in general, so we were very pleased to see the number.

The year-over-year numbers were still very consistent, just under 4% year-over-year growth on a three-month-moving-average basis. So, if we strip out all the weekly noise, [the effects of Hurricane] Sandy and all that stuff, we're still growing about the same as we were. [There was] no deterioration. It was still a little bit slower than the period a year ago when we were probably growing instead of the 4% that we got this holiday season--[last year it was] something more like 5% or 6%--but inflation is also lower this time around.

Stipp: When you adjust for inflation, we didn't have really as big of a slowdown in growth from last holiday season to this one as you might originally think looking at the numbers?

Johnson: Right.

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