Sales eked out a 0.1 per cent increase in December, to a seasonally adjusted $400.6 billion.
It was the second straight month that sales topped $400 billion. Revised government data showed that sales in November also surpassed that level.
December's increase, though, was the weakest in seven months. Excluding volatile auto purchases, overall sales actually fell 0.2 per cent. It was the first such drop since May 2010.
But analysts said they still expect consumers to help the economy strengthen further, especially because businesses have stepped up hiring. More jobs mean more people with money to spend.
"Although consumer spending is not particularly robust, households do continue to spend and provide moderate support for the overall economy," said Steven Wood, chief economist at Insight Economics.
For all of 2011, sales totalled a record $4.7 trillion. That was a gain of nearly 8 per cent over 2010 — the largest percentage increase since 1999.
Steady sales gains have fueled a 20 per cent surge from the low during the Great Recession. Monthly sales are even 6 per cent above their pre-recession high. The figures confirm evidence that the economy was strengthening as 2011 ended.
Part of the reason for December's weak showing was lower gasoline prices. Those prices reduced sales at gasoline stations. Excluding gas stations, overall retail sales would have risen 0.3 per cent in December.
Another factor was heavy discounting during the holiday shopping season. Many retailers said they had to offer cut prices in December to attract shoppers.
The sluggish retail-sales data followed a report this week that consumers raised their borrowing in November by the most in a decade. Many might have charged more spending to their credit cards because their pay has all but stagnated. The savings rate has also declined.
Continued job growth may be needed to sustain spending increases.
In the meantime, Thursday's news "reminds us that the economy is still struggling," said Michelle Meyer, an economist at Bank of America Merrill Lynch. "This is the recovery of fits and starts."
Separately, more people applied for unemployment benefits last week. Applications rose 24,000 to a seasonally adjusted 399,000. But the gain was due largely to companies shedding workers after the holiday season.
Economists downplayed the increase. It followed three months of declines that had reduced the number of unemployment applications to their lowest level in three years.
And businesses increased their stockpiles in November to meet rising consumer demand. That gain likely boosted economic growth in the final months of 2011. Companies are rebuilding stockpiles after cutting them last summer amid fears of another recession. It means many anticipate higher consumer spending.
The retail sales report showed that holiday discounts helped push department store sales down 0.2 per cent in December.
Compared with the same time last year, retail sales have risen 6.4 per cent. An earlier survey of 25 major retail chains by the International Council of Shopping Centers found that December revenue at stores open at least a year rose 3.5 per cent over the same month a year ago.
That survey's figures aren't adjusted for seasonal changes; the government's figures are. The government report is also a broader gauge. It covers purchases at all retailers, not just major national chains. It also includes auto dealerships, restaurants and bars, grocery stores and gasoline stations.
The strength last month was led by a 1.5 per cent jump in auto sales. Furniture and hardware stores reported increases, too. But sales at electronics and appliance stores sank nearly 4 per cent.
The government's retail sales report is its first look each month at consumer spending, which accounts for roughly 70 per cent of the economy. A healthy report typically signals a stronger economy.
This week, the Federal Reserve issued a report saying the final six weeks of 2011 were among the economy's best last year. It noted higher holiday and auto sales, along with increased travel.
U.S. automakers have said that November and December were their two best sales months in 2011. The job market has brightened, too. Employers added 200,000 jobs in December. And the unemployment rate fell to 8.5 per cent, the lowest in nearly three years.
At the same time, the U.S. economy remains under threat. The biggest risk is that Europe's debt troubles could destabilize the world's financial system and trigger a global recession.
Other threats could come from another spike in oil prices or political gridlock that blocks a full-year extension of a Social Security tax cut and emergency unemployment benefits.
Mark Vitner, senior economist at Wells Fargo, said he thinks spending will ease in coming months, in part because of a need to rebuild savings after the holidays.
"We don't think the consumer is completely going into hiding, but we do think that the pace of consumer spending is poised to slow," Vitner said.
Because the government's retail sales report is seasonally adjusted, the current month can be compared with the previous month. But the figures aren't adjusted for inflation.
A separate government report each month measures consumer spending. It's a more inclusive gauge. It covers all spending at retailers — for both durable goods like cars that are expected to last for years and nondurable goods such as food.
It also covers spending on services. Services include items such as doctor's visits, airline tickets, apartment rentals and utility bills. The service category makes up two-thirds of consumer spending and isn't covered in the retail surveys.
AP Economics Writer Christopher S. Rugaber contributed to this report.