US retail sales increased less than expected in November as Americans cut back on discretionary spending despite a strong labour market.
This raised fears of a much faster slowdown in fourth-quarter economic growth than currently anticipated.
The report from the Commerce Department today bucked a recent raft of fairly upbeat data on the labour market, housing, trade and manufacturing.
This data had suggested the economy was growing at a moderate speed despite headwinds from trade tensions and slowing global growth.
The Federal Reserve this week kept interest rates steady and signaled that borrowing costs were likely to remain unchanged at least through next year amid expectations the economy would continue to grow modestly and the unemployment rate remain low.
US retail sales rose 0.2% last month.
Data for October was revised up to show retail sales increasing 0.4% instead of climbing 0.3% as previously reported.
November's meagre sales gains are at odds with reports from retailers of brisk business during the Thanksgiving period.
Some economists believed the data would be revised higher when the government publishes December's retail sales report in January.
Economists polled by Reuters had forecast retail sales would accelerate 0.5% in November. Compared to November last year, retail sales increased 3.3%.
Excluding cars, fuel, building materials and food services, retail sales edged up 0.1% last month after rising by an unrevised 0.3% in October.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Consumer spending, which accounts for more than two-thirds of US economic activity, grew at a 2.9% annualised rate in the third quarter.
November's small rise in core retail sales could prompt economists to lower their GDP growth estimates for the fourth quarter, which are currently converging around a rate of 1.8%. The economy grew at a 2.1% pace in the third quarter.
Despite the slim gains in retail sales in November, US consumer spending likely remains supported by a strong labour market.
The government reported last week that the economy created 266,000 jobs in November and the unemployment rate fell back to 3.5%, its lowest level in nearly half a century.
Last month, car sales increased 0.5% after rising 1.0% in October. Higher petrol prices lifted receipts at service stations by 0.7%. Online and mail-order retail sales increased 0.8% after increasing 0.6% in October.
Sales at electronics and appliance stores increased 0.7%. Receipts at building material stores were unchanged and sales at clothing stores fell 0.6%. Spending at furniture stores edged up 0.1%.
But Americans cut back on spending at restaurants and bars, with sales falling 0.3%.