Retail sales were higher than expected but are still not keeping pace with inflation, according to the Census Bureau’s latest data…(Census Bureau)
- M-O-M: Advance estimates of U.S. retail and food services sales were up 1.0% in June to $680.6 billion.
- Y-O-Y: Retail sales were up 8.4% when compared to the same time last year.
Gas stations saw the biggest monthly jump with a 3.6% increase from May followed by online retailers (+2.2%) and furniture stores (+1.4%). Looking at year-over-year gains gas stations once again take the top spot with sales up 44.7% followed by miscellaneous stores (+19.4%) and restaurants (+17.2%).
- NOTE: Not all categories were in the green. Hardware stores had the worst month with a 0.9% drop and electronic stores were doing the worst year-over-year with a 6.2% decrease.
The good news is that retail sales beat economist expectations of a smaller 0.8% increase in June. The bad news is sales are not keeping up with inflation. Retail sales are not adjusted for inflation and the latest CPI print had prices up 1.3% for the month and 9.1% for the year. Adjusting for inflation means sales are down for the month and year 0.3% and 0.7%, respectively.
The big analysis for everyone right now is what these numbers mean for the upcoming Fed decision. Neil Irwin, of Axios, tweeted, “Retail sales comes in a little bit hot at +1%, suggesting nominal consumer spending remains strong. Question is whether that’s too hot for the Fed to handle.” Opinion has shifted since the CPI report and according to the CME Group, a 100 bip hike is now under 30%.
- Robert Perli, Head of Global Policy Research at Piper Sandler, noted on Twitter “I bet Gov. Waller regrets having flagged retail sales as something that could decide between the two. Taken literally, this report increases the odds of 100 bps…However, I don’t detect a ton of support for the idea. I think Waller was just buying time”