Peter Boockvar (via The Big Picture) details:
December retail Sales were light relative to expectations, rising just 0.1% month over month headline and falling 0.2% ex auto’s vs up 0.3% for both that was expected. Sales ex auto’s and gasoline were flat vs an expected rise of .4% and also taking out volatile building materials, sales fell 0.2%.November was revised up slightly for all categories but not enough to offset the December weakness relative to expectations. Sales weakness was seen in the 3.9% drop in electronics sales after just a 0.5% rise in Nov. Department store sales fell after zero growth in November and online retail sales fell 0.4% after a 1.7% rise in November.
The below chart outlines the change in sales by category. What is important to note (and NEVER reflected in reporting by mainstream news or economist forecasts) is that retail sales is a reflection of nominal, rather than real sales. We already know for example that the decline in gasoline sales was a direct result of the decline in the price of gas during December.
What does this mean?
It means that if CPI was flat or negative in December (my guess is it will be) then actual sales aren't as bad as reported in real terms (i.e. it won't be as big a hit to GDP growth expectations). That said, it would still reflect real weakness and the power of consumers to demand larger discounts during the holiday shopping season (perhaps resulting in lower sales in 'holiday' items like electronics and general merchandise).