Retail Sales “Gain” in August? Not Really

By SBE Council at 14 September, 2023, 4:53 pm

by Raymond J. Keating –

The U.S. Census Bureau report that retail and food services sales increased by 0.6 percent in August would seem like good news for the state of the economy. But this gain is less than it appears.

Inflation Factor

First, it must be noted that this 0.6 percent increase in retail sales in August versus July matched the 0.6 Consumer Price Index inflation for the month. That essentially translates into no real gain in retail sales.

Rising Gas Prices

Second, gasoline stations saw, by far, the largest gain in sales (+5.2 percent), which also related to the fact that more than half the jump in CPI came from gas stations. Retail sales less gas stations registered nominal growth of 0.2 percent.

Third, beyond gas stations, only two other major categories of sales came in ahead of the inflation rate – electronics and appliance stores (+0.7 percent) and clothing and clothing accessories stores (+0.9 percent).

Flat Sales and More Inflation

Fourth, nonstore retail sales – that is, mainly ecommerce – was flat (0 percent) in August.

Fifth, and finally, for the past year, retail and food services sales increased by 2.5 percent. That, again, came in at less than the inflation rate of 3.7 percent.

Again, it’s hard to get too excited about the topline number on retail sales once you take a look at the underlying 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.