Real Retails Sales Up for Third Straight Month

By SBE Council at 15 August, 2023, 1:22 pm

by Raymond J. Keating –

The latest retail sales report from the U.S. Census Bureau was good news. Retail and food services sales increased by 0.7 percent in July, and growth was revised up slightly for June.

The big gainers in July were:

● Nonstore (mainly online) retailers at +1.9 percent

● Sporting goods, hobby, musical instrument and book stores at +1.5 percent

● Food services and drinking places at +1.4 percent

● Clothing and clothing accessories stores at +1.0 percent.

Meanwhile, the areas experiencing the largest declines were linked to homes, with furniture and home furniture stores at -1.8 percent and electronics and appliance stores at -1.3 percent.

As noted in the following chart, retail sales growth was positive in each of the last four months.

Source: Federal Reserve Bank of St. Louis, FRED

But a key point is that retails sales growth in each of these past three months grew at a faster rate than inflation, resulting in real gains.

And with recent easing of inflation, the gain in retail and food services sales over the past year of 3.2 percent matched inflation (as measured by the Consumer Price Index) over the past year. Why is no real growth relatively good? Because in previous months, the gains over the previous year turned into declines when inflation was considered.

This report shows another step in the right direction, at least for now. And of course, this is a good news story for the small businesses that overwhelmingly populate retail trade, with 98.4 percent of employer firms having fewer than 100 employees, according to the latest Census data.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.