Retail sales were positive in August, according to the Census Bureau, which actually beat expectations and gave the administration a slight win after a disastrous inflation report earlier this week.
- M-O-M: Advance estimates for U.S. retail and food services were up 0.3% from the previous month to a seasonally adjusted $683.3 billion in August.
- Y-O-Y: Retail sales were up 9.1% when compared to the same time last year.
Beat the Street. Economists had projected that retail spending would be flat in August.
Revision. July’s numbers were revised downward 0.2% to 681.3B from $682.8B. If you used the unrevised data, the month-over-month data is only up .07%.
Money is Fungible. Thanks to falling gas prices spending in gas stations fell 4.2% month-over-month and allowed consumers to spend money elsewhere for the month.
- Motor vehicle & parts dealers took the most advantage of bigger consumer pocketbooks with a 2.8% gain in August followed by miscellaneous retailers (+1.6%), restaurants and home improvement stores both up 1.1%.
- Gasoline station spending is still up the most year-over-year with a 29.3% when compared to August 2021 followed by miscellaneous retailers (+15.3%), online retailers (+11.2%), and Restaurants (+10.9%).
Besting Inflation. This is now the second month in a row that retail spending was slightly higher than the inflation rate. CPI was up 0.1% compared to retail spending up 0.3%.
Analysis. All economic data right now is looked through the prism of the Fed. Jeanna Smialek at The New York Times tweeted “This morning’s retail sales data were a bit of a Rorschach test (exceeded expectations, but the control group was weak)…It seems like the upshot, esp. combined with sunny jobless claims, is that while the economy is moderating, it is hardly falling off a cliff. Given inflation, that raises a big question: Will the Fed see a gradual down-drift as sufficient?”
BOTTOM LINE: Retail spending was better than expected, but unless incomes start keeping pace with prices this is not bound to last.