By and large, consumers kept their wallets shut in December and spending was flat, delivering disappointment to retail exchange traded funds (ETFs).

Consumer spending rose by only 0.2% after jumping 1% in November. It accounts for two-thirds of the nation’s economic growth, reports Michael M. Grynbaum for the New York Times, so the numbers don’t give the Federal Reserve much wiggle room in its policy decisions in the coming months.

Record-high oil and food prices are keeping consumers from spending much else in other areas.

The slow spending puts the Fed in a bind: consumers don’t spend and prices rise. If the Fed cuts interest rates to stimulate growth, but that also causes prices to rise.

I’m just glad I’m not in charge of making those decisions.

Consumer- and retail-related ETFs could feel the pinch:

• Consumer Discretionary SPDR (XLY), down 0.37% year-to-date and 10.5% over the last three months.
• Retail HOLDRs (RTH), up 1.9% year-to-date, but down 4% for the last three months.
• SPDR S&P Retail (XRT), up 1.3% year-to-date, but down 11.5% for the last three months.

Tags: Federal Reserve, Oil, Retail, XRT