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Advance Retail Sales Jump But From Significant Downward Revisions

Retail sales rose strongly in January. Where to from here?
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Advance Retail Sales data from Census Department, chart by Mish

Advance Retail Sales data from Census Department, chart by Mish

The Census Department reports Advance Retail Sales for January, 2022 rose by 3.8%. 

Details 

  • Advance estimates of U.S. retail and food services sales for January 2022, were $649.8 billion, an increase of 3.8 percent from the previous month, and 13.0 percent above January 2021. 
  • Total sales for the November 2021 through January 2022 period were up 16.1 percent from the same period a year ago. 
  • The November 2021 to December 2021 percent change was revised from down 1.9 percent to down 2.5 percent. 
  • Retail trade sales were up 4.4 percent from December 2021, and up 11.4 percent above last year. 
  • Gasoline stations were up 33.4 percent from January 2021, while food services and drinking places were up 27.0 percent from last year.  

Not Adjusted For Inflation

One key point, often missed, is that sales are not adjusted for inflation. 

People may be driving more, but most of that 33.4% gain in gasoline sales is the price of gas. 

Also, the Covid-19 pandemic comes into play. 

People are slowly getting back to normal which accounts for the 27% increase in food and drinking places. 

The Census Department does adjust for seasonal factors including holidays, but the decline (December revised lower) and sharp rebound in January has a whiff of seasonal factors gone a bit haywire.

Revisions to December

  • Retail Sales: From -1.9% to -2.5%
  • Excluding Vehicles: From -2.3% tp -2.8%
  • Excluding Vehicles and Gas: From -2.5% to -3.2%

Advance Retail Sales Detail 

Advance Retail Sales data from Census Department, chart by Mish

Advance Retail Sales data from Census Department, chart by Mish

Advance Retail Sales Major Categories 

Advance Retail Sales data from Census Department, chart by Mish

Advance Retail Sales data from Census Department, chart by Mish

This was a strong report to kick off the year, but not as strong as it appears. 

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There were huge downward revisions in December, and expect revisions, albeit direction unknown, for this data.

Finally, one might wonder how much of the January jump was due to stock market euphoria with the market hitting fresh highs. 

Consumer sentiment is fickle and can easily turn on dime, and arguably already has. This is mid-February but we are discussing preliminary January data, sure to be revised.

Most Inflation in 40 Years 

The CPI rose another 0.6% in January, at a year-over-year clip of 7.5%.

This is the biggest annual jump in 40 years. 

For discussion, please see CPI Jumps Most Since February 1982, Up at Least 0.5% 9 Out of Eleven Months

The Fed is almost certain to hike in March, with an expectation of a half point and many more this year.

Mortgage rates are rising rapidly and home sales poised to slow. That alone will put a damper on new home furnishing, landscaping, paint, etc.

It's not where we've been that matters, but where the economy is headed with numerous headwinds, especially interest rates.

Gift Card Addendum

Gift cards do not count as sales until they are spent. That may have had a huge influence on December and January sales.

This post originated at MishTalk.Com.

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