Retail Sales Gains in March? Not Really

By at 14 April, 2022, 11:21 am

by Raymond J. Keating –

Retail and food services sales grew by 0.5 percent in March, according to the latest report from the U.S. Census Bureau.

The problem is that retail sales numbers are not adjusted for inflation. And the latest estimate put Consumer Price Index inflation at 1.2 percent in March. Well, so much for that 0.5 percent gain.

And over the past year, retail sales grew by 6.9 percent. That normally would be quite impressive, but for the fact that inflation ran at 8.5 percent. So, an impressive gain turns into a real decline.

In fact, over the past year, monthly gains in retail and food service sales ran ahead of the monthly inflation rate in only five of those 12 months.

Indeed, the ills of inflation are widespread. As SBE Council has explained, income is lost, taxes raised, trade undermined, and now we see the effect on sales.

To the extent that inflation is due to supply chain issues, policymakers should be boosting incentives for entrepreneurship and investment to address current and future problems and opportunities.

That is accomplished through tax and regulatory relief, and advancing free trade, not via increased tax and regulatory burdens, and protectionism. And to the extent that inflation is specifically about public policies, then, again, we need tax and regulatory relief, as well as a federal reserve focused on price stability.

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


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