The Latest Retail Sales Report: Is it a “Good” One?

By at 16 November, 2021, 12:37 pm

by Raymond J. Keating –

The topline number in the latest retail sales report from the U.S. Census Bureau would be quite welcome, even celebrated, in normal times. But these are not normal times.

Retail and food services sales in October increased by 1.7 percent over the previous month. That’s a solid, even robust, gain, right?

Source: Federal Reserve Bank of St. Louis, FRED

Well, we also have to keep in mind that inflation (as measured by the Consumer Price Index) ran at 0.9 percent in October. So, a big chunk of the October gain in retail sales effectively gets wiped out by inflation.

However, we’re still left with a gain, less inflation, of about 0.8 percent. That’s still pretty darn good.

Looking at particular sectors, the biggest gain in October came in sales at nonstore retailers (i.e., e-commerce), which jumped by 4.0 percent. That was followed by gas stations at 3.9 percent, and electronics and appliance stores at 3.8 percent.

Where were problems clearest? Clothing stores saw a decline of 0.7 percent in sales. Health and personal care stores sales were down by 0.6 percent. And food services and drinking places saw no gain, coming in flat at 0.0 percent. Factor inflation into these stories, and the outcomes for October were even worse than the stated changes.

So, is this a “good” retail sales report?

I guess the answer is a tentative “yes.” The longer that inflation persists, though, the harder it will be on consumers and retail establishments.

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


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