I went back over the advance retail sales starts for a closer look at what’s happening.
Advance Retail Sales 1992-Present
The above baseline chart shows sales have recovered above pre-Covid levels for the third month.
For June, July, and August, sales topped $206 billion vs $203 billion in February, seasonally-adjusted in 1982-1984 dollars.
Misleading Chart
The above chart is misleading because it does not show winners and losers, nor does it show year-to-date comparison.
Year-to-Date Total Sales Not Seasonally or Price Adjusted
- 2019: $510.6 Billion
- 2020: $403.9 Billion
Retail sales have not really recovered but there are winners and losers.
Advance Retail Sales in 2020
The recovery is more than a bit uneven.
Details
- Motor vehicles and parts, have recovered.
- Nonstore retailers (Amazon) never slowed in the first place.
- Food and beverage store sales shot up but have given back some gains.
- I doubt the rebound in food and drinking places is as good as it looks.
- General merchandise sales generally flatlined thanks to stores like Wal-Mart that stayed open because they offered food.
- The Gas rebound is anemic because people are still working from home.
- Department stores remain in deep trouble.
Department stores have been dying a slow death for decades. Does anyone care?
For further discussion, please see What Major Stores Went Bankrupt in 2020?
Mish
Crime at the malls accelerated this trend.
I posted something last night that went poof, so I’ll say it again, briefly.
The death of major retailers is perhaps largely due to internet sales, and many other factors like high rents and so forth….figure into the equation…but I would like to mention that an often overlooked part of it is the role played by Wall Street LBO specialists with their unlimited cheap money.
Sears, in particular, could be used as a case study to show how a hedge fund manager took over a company, spun off all the good assets, screwed long term employees, and then left the corpse of a once great company to rot.
When people talk about jobs lost to China…..I always think about the jobs destroyed by people like Eddie Lampert at Sears (net worth $1.2B))…and even Mitt Romney, back when he was with Bain Capital. (Remember KB Toys?).
Many jobs (I have no idea exactly how many, but a lot) went away because of predatory capitalism in the form of LBO’s. Most Americans don’t even know what a leveraged buy-out is…much less how it affected their lives.
Yes, I do care that the legacy retailers are all dying out. And it pisses me off that nobody much gets this part of it.
“LBO specialists with their unlimited cheap money…”
A monetary system anchored to gold would not have “unlimited cheap money”.
There are many ways banking could be reformed without going back to a gold standard…but I’m for any honest money, and I’m for American families and the little guy.
How about the Treasury creates the money supply instead of banks?…. and banks have to mark their collateral to market and have some limits on how much they can leverage deposits?
Having owned gold, my own conclusion is that it tended (for me, at the time that I owned it) to be something of a stranded asset. If you view it as insurance instead of an investment, then I suppose that’s okay.
But for us mom and pop types….. holding much of one’s net worth in gold CAN at least, keep you from making better investments.
Right now gold looks like a great hedge..and I expect metals to do pretty well….but it’s because the currency is being debased.
One thing I’ve found many goldbugs ignore is taxes. If you pay them like Ann Coulter and I do, then you end up sharing an awful lot of your gold gains with your Uncle Sam.
I’m not a gold basher…..just wanted to give you some food for thought.
Extractionary capitalism is perhaps a more apt term.
A lot of GDP and so-called “wealth creation” is all based on extracting value and monetizing it. In the end, no good can come from an economy based on nothing more than paper assets … there needs to be income generating production.
Macy’s has survived over 100 years, I doubt that “this generation is different” is actually soooo different that it takes them down. People will continue to shop there.
@ IA Hawkeye in So Cal…I respectfully disagree due to what I’ve seen at the 2 Macy’s department stores I have been in recently. These are in the Orlando, FL area. Macy’s took over homegrown Burdine’s a number of years ago. I can park directly in front of the Macy’s that is closest to me….20 yards to front doors. The mall they are located in is dying….2 miles from downtown Orlando. Sears pulled out a couple of years ago, JCP just shuttered its store this week. The really nice Dillard’s went to a strictly clothing discount store (nice sales!). The food court died.
The Macy’s stores I have been in look decrepit. Sales associates are pretty much non-existent. I think they are cutting costs as much as possible to hang on as long as possible hoping for an uptick in business. I don’t see it happening. The local Nordstrom’s and Neiman-Marcus typically seem to do well as they are located closer to the tourist corridor and they attract a lot of foreign shoppers. I would imagine that they are slow now due to Covid-19 limiting travel.
When consumption declines, production declines which further hurts consumption.
Watch the birth rate to predict the future. Infinite growth is not realistic.
Why the real estate boom could keep going for years link to axios.com
Yeah, for people with collateral/credit. Expect a greater proportion of “Blackrock” type landlording.
The non-seasonally adjusted figures are staggering, and far more revealing, in my view.
parking lot at local mall here is always full.
When are you going to mention Mitch McConnell’s BLOCKING of AID to businesses. He didn’t like the high amount the Dems suggested which, by the way, is NOT unreasonably high. When are you going to stop giving Trump a pass. Heard you on Coast tonight and said “He CANNOT be serious!” re the debate. Biden didn’t have a chance in hell to be as stupid as Trump as Trump loudly interrupted 75 or so times. Come on, how can anyone trust your judgment on the markets when you’re so unreliable in calling things as THEY ARE. Shame on you.
“When are you going to stop giving Trump a pass.”
Of all the silly comments that takes the cake – at least for the day.
No blogger has blasted Trump more than I have for weeks.
you have TDS when you do, you’re shameful when you don’t. Trump has made us all enemies.
What else has Trump made you do?
For a bumbling idiot, Trump sure manipulates a lot of people into doing things they wouldn’t. Or maybe Trump is just the symptom of a larger problem. You know the reason why he was elected in the first place.
This country has been broken for a long time. Thinking a new president will change that is craziness.
It all goes back to Putin. He’s in control of everything.
If only he were not pulling all those string, everything would be honky dory.
It’s funny when people talk about China or Russia manipulating our election, I think they generally think they want to destroy us. That is not their motive. Their motive is to make their country more competitive and improve their economy. If hurting us is the path, thats what they do. If helping is works, they do that. Like us they are just self serving.
I firmly believe the Russia and China would preferred Hillary over Trump. You know considering the millions they donated to the Clinton foundation. Obviously they prefer Biden, consider the toes Trump has stepped on. That doesn’t matter though because they will do what is best for them.
I suggest you read the final two lines of this article, then apologize
GOOD JOB MISH. nice write up. and great job on coast to coast. keep it up.
Hmm. Did I lose another comment to the void? Appears I did.
Mapped: The Uneven Recovery of U.S. Small Businesses
Small businesses are the backbone of the U.S. economy, employing nearly half of the private sector workforce.
Unfortunately, lockdown and work-from-home measures brought about by COVID-19 have disproportionately affected small businesses – particularly in the leisure and hospitality sectors.
As metro-level data from Opportunity Insights points out, geography makes a great deal of difference in the proportion of U.S. small businesses that have flipped their open sign. While some cities are mostly back to business as usual, others are in a situation where the majority of small businesses are still shuttered.
Eventually this will filter up to big business. Big business doesn’t compete with small business on many fronts, but they (used to) do business with each other.
The Trump govt like the Obama govt has completely deserted main Street in favor of the banks and WS.Obama and Old Yellern pumped over half a quadrillion dollars into banks and WS,Main Street got an EBT card and $25 in extended UE benefits,Trump and JP…. OMG,easily$150 tril in 4 years to drive stocks up,while Main Street got $1200! Shameful!
Never understood the department store model. If you want shoes they’ll never have the merchandise of a dedicated shoe store, If you want a TV same thing. And they’re constantly tying up capital in merchandise. the key to selling merchandise is to make sure you’re in the moving business and not the storage business, products that sit must be financed. this is the advantage of on-line sales and often the on-line merchant is just a website and the actual product is being shipped from the producer. I learned that when buying a dog crate. Department stores can serve a purpose for the consumer but for its a terrible business model for the merchant. I’m surprised its lasted this long. They only excel in presenting the customer the ability to see touch , feel and try on the product. I’ve bought clothing , high end mattresses and rugs but for the most part grudgingly and on sale. I doubt the department store made much money on me if any.
The Department store starts with the concept of a below market rent. For example, while other tenants in a Mall may be paying $50/square foot, the Department Store, as the “anchor” may only be paying $6/square foot. Next, the Department stores had certain category killers, designed to draw tenants. For example, Sears had the best tools and the best appliances around. Others had the best small appliances, or perhaps the best China shop, or gift shop. They also had respectable selections of pretty much everything, and a reputation for standing behind what they sold. The result was that people would routinely buy from Sears, and then wander around the mall and make a few other purchases, and everyone was happy.
The first thing to undo the model was stores like K-Mart, Wal-Mart, and Target. They didn’t offer all the items in the Department store, but what they did offer, they offered at lower price. The next thing was online shopping. The Department Store model was to be big, and that meant a lot of selection, but it also meant a lot of overhead. When the profitable sales were chipped away by the lower overhead marketers, their death became inevitable.
It just goes to show that in a capitalistic society, things never stay the same. What worked for years may not work tomorrow.
yep. for years Norstrom was the place to get men’s shoes and suits. The only time I went to sears was for tools , car batteries and appliances.
This was a good analysis Mish, thanks.
I’ll compare it to Spain just for some perspective :
Retail dropped 30% yearly and is at around -5% now, depending on chart the US dropped around 10% and is around level now
Courtesy eleconomista
And as for virus the picture is this, with Madrid going into new lockdowns while political arguments and incompetence compete with each other
Courtesy Matthew Bennett
(The new peak in Spain is not directly comparable to the old one due to testing criteria, amount of tests available, but it is comparable to other countries in the west in terms of current rate, as well as obviously underlining that a new epidemic is underway)
Thanks for the charts, hosted on FT.
As far as I know, nobody has made any economic/social impact analysis of this data, and what does it translate to.
By cursory look:
East Asia: best
Europe, NA: lost it
the rest: not tested
For now it adds up to increased subsidy, but to me at a broader level it looks like reshuffling the deck or rearranging a theatre – and no one knows what seat they will be given or if they will be dealt to in future even.
It’s funny, in europe not long ago debt to gdp of countries and economic cycle etc. were persistent theme, now that is all in some drawer somewhere…irrelevant or “incalculable” , instead it is the time of “saviours” like the NextgenerationEU project… with no accountability attached whatsoever. I mean, they are all helping so who is going to ask questions or complain ? Locals just have to put up with soppy rhetoric to get paid is all. To anyone watching from outside though it is clearly a takeover.
Despite what you said about EU, why is the euro rising? It’s not that there is any fiscal or monetary responsibility in EU, USA or Canada.
Hard to say because currency trading and hedging is so complex, but I think it is more that the dollar is weakening (along with the Yen which seems to track it). Even if US rates were much higher, say 10%, and they moved to just being average, say 5% which would still be much stronger than the euro, you would see the euro strengthen against the dollar normally. So euro hasn’t changed much, you could say the recent spending package provided confidence or weakened it depending on view, instead the dollar and those currencies tracking dollar have weakened some… ?
Motor vehicles and parts is actually higher now than precovid. I’d attribute that to people’s desires to escape the political bullsh*t.
“A job at Amazon is a gateway to the American middle class” – President Obama
How Amazon hid its safety crisis” [Reveal News]. “But a new cache of company records obtained by Reveal from The Center for Investigative Reporting – including internal safety reports and weekly injury numbers from its nationwide network of fulfillment centers – shows that company officials have profoundly misled the public and lawmakers about its record on worker safety. They reveal a mounting injury crisis at Amazon warehouses, one that is especially acute at robotic facilities and during Prime week and the holiday peak – and one that Amazon has gone to great lengths to conceal. With weekly data from 2016 through 2019 from more than 150 Amazon warehouses, the records definitively expose the brutal cost to workers of Amazon’s vast shipping empire – and the bald misrepresentations the company has deployed to hide its growing safety crisis…. Amazon’s injury rates have gone up each of the past four years, the internal data shows. In 2019, Amazon fulfillment centers recorded 14,000 serious injuries – those requiring days off or job restrictions. The overall rate of 7.7 serious injuries per 100 employees was 33% higher than in 2016 and nearly double the most recent industry standard.” • Good reporting, with a guide to individual hell-holes warehouses.