A Retail Sales Muddle for August

By SBE Council at 15 September, 2022, 10:34 am

by Raymond J. Keating –

The latest report on retail sales turns out to be more of a muddle than anything else.

First, retail and food services sales increased by 0.3 percent in August versus the previous month, while the July reading was revised from basically unchanged to down 0.4 percent.

Since retail sales data are reported in nominal dollars (i.e., unadjusted for inflation), it’s worth noting that inflation has taken a breather for these past two months. Therefore, we can take these recent sales data more or less at face value.

Second, autos data saw big swings – up by 2.8 percent in August after being down by 2.0 percent in July. So, ex-autos, sales were down by 0.3 percent in August and flat in July.

Third, food services and drinking places saw sales increase by 1.1 percent in August, after declining by 0.8 percent in July.

Fourth, big changes have occurred with gas stations given the recent decline in prices at the pump. So, if we exclude gas stations, retail sales increased by 0.8 percent in August, and were only down by 0.2 percent in July.

One could argue that the consumer is holding up relatively well in turbulent economic times based on these numbers, but in the end, this is, as noted above, more muddled than anything else. That, in turn, doesn’t point to the consumer playing a key part in getting the U.S. economy back on a strong growth track in the third quarter of this year.