September Retail Sales Gains: The Details Behind the Data

By at 16 October, 2021, 9:05 am

by Raymond J. Keating –

The U.S. Census Bureau reported that retail and food services sales grew by 0.7 percent in September. What does that and the rest of the data tell us?

The Inflation Factor

First, we have to point out that retail sales are not adjusted for inflation. So, when inflation is factored in (see SBE Council’s brief), the inflation-adjusted gain in retail sales registered about 0.3 percent. In addition (as noted in the following chart), since April 2021, retail sales have declined, with the inflation-adjusted falloff even greater than illustrated.

The Resiliency Factor

Second, but even after taking inflation into account, continued growth in retail sales in September – while the pandemic still created uncertainty, a large number of people remained out of work or out of the labor force altogether, and enhanced unemployment benefits came to an end – pointed to some degree of resiliency among U.S. consumers.

A Closer Look at Restaurants and Bars

Third, after being hit so hard by the pandemic, it’s worth taking a look at food services and drinking places (i.e., restaurants and bars) sales in particular. As noted in the following chart, after climbing out of a deep pandemic hole, sales have slowed over the last couple of months – again without even considering inflation. In addition, restaurant and bars clearly haven’t experienced the degree of bounce back as has happened in retail sales more broadly.

In recent months, the retail sales story has been mixed, just as has been the case with the broader economic recovery. If the federal government piles on with higher taxes and ramped up regulation, that would further feed uncertainty and higher costs, thereby working against economic recovery.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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