Inflation adjusted retail sales (advance release) remains in a downward trend channel, but in August 2011 is now positioned at the upper end of the channel. Given that inflation pressures are moderating due to the poor economic conditions, it is difficult to say consumers are hunkering down for a recession.
The headlines say retail sales are unchanged month-over-month and up 7.9% year-over-year. Econintersect’s analysis is up 2.0% month-over-month and 8.4% year-over-year.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $389.5 billion, virtually unchanged (±0.5%)* from the previous month and 7.2 percent (±0.7%) above August 2010. Total sales for the June through August 2011 period were up 7.9 percent (±0.7%) from the same period a year ago. The June to July 2011 percent change was revised from +0.5 percent (±0.5%)* to +0.3 percent (±0.2%).
Retail trade sales were up 0.1 percent (±0.5%)* from July 2011, and 7.5 percent (±0.7%) above last year. Gasoline stations sales were up 20.8 percent (±1.7%) from August 2010 and nonstore retailers sales were up 10.4 percent (±2.5%) from last year.
The difference between the headlines and Econintersect are determined by the seasonal adjustments. Econintersect feels the Great Recession has distorted the data and does not take New Normal trends into consideration enough. The seasonal adjustment methodology of US Census uses data over many years.
August was again a record month, with 7 of the last 9 months having record sales. The burst in retail sales in August 2011 is similar to March 2011.
The impact of the monthly retail sales data on GDP is not straight forward. Real GDP (of which the consumer is over 60%) is adjusted for inflation. Further, GDP is an analysis of quarter-over-quarter or year-over-year growth. When retail sales are adjusted for inflation, the clear downtrend is visible.
The weakest areas in retail sales remain sporting goods, department stores, building materials and food services.