Data released on Thursday showed a larger-than-expected decline in retail sales during November. Analysts at Wells Fargo point out that sales in categories more reliant on credit started to turn and holiday sales categories flopped. While they expect spending to contract in 2023, they point out it's too soon to call this the start of a sustained decline in goods spending.

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“It's worth mentioning that despite the pullback in sales last month, the overall level of sales remains elevated, suggesting consumers are continuing to spend at a decent clip this holiday season. Specifically, sales at holiday retailers were still higher than in September, and 5% higher than where they stood last year. But the decline in November suggests some consumer momentum may be starting to fizzle out.”

“Given all the headwinds for consumer spending we have been surprised at the resilience and admittedly had to push out the timing of the eventual retrenchment in spending. While we do expect consumer spending to contract in 2023, this ugly November report might be a bit of a head-fake. Specifically it may be more indicative of the long-delayed pivot form goods to services. Yes, goods spending growth slowed on trend throughout 2022, but it has not yet entered a sustained decline.”