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Factoring in Inflation, Retail Sales Remain Very Weak in September

Retail sales were flat in September missing economist's estimates. Factoring in the CPI, sales were deeply negative.
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Retail sales data from Commerce Department, CPI adjustment by Mish

Retail sales data from Commerce Department, CPI adjustment by Mish

Advance Retail Sales

Today, the Commerce Department released Advance Retail Sales Data for September.

  • Advance estimates of U.S. retail and food services sales for September 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $684.0 billion, virtually unchanged from the previous month, but 8.2 percent above September 2021. 
  • Total sales for the July 2022 through September 2022 period were up 9.2 percent from the same period a year ago. 
  • The July 2022 to August 2022 percent change was revised from up 0.3% to up 0.4 percent.
  • Retail trade sales were down 0.1 percent from August 2022, but up 7.8 percent (±0.7 percent) above last year. 
  • Gasoline stations were up 20.6 percent  from September 2021
  • Nonstore retailers were up 11.6 percent from last year.

The key phrase is "but not [adjusted] for price changes."

Advance Retail Sales Month-Over-Month

Retail sales data from Commerce Department, CPI adjustment by Mish

Retail sales data from Commerce Department, CPI adjustment by Mish

Real vs Nominal Sales Discussion

  • Real sales peaked in March of 2021 (first chart, first blue highlight).
  • There was a bounce in April of 2022 (first chart, second blue highlight). 
  • In nominal terms, retail sales rose in 6  of the last 7 months. 
  • In real terms, retail sales fell in 5 of the last 7 months.

Real vs Nominal Advance Retail Sales Long Term

Real vs Nominal Advance Retail Sales Detail 2022-09 Long Term

Real Retail Sales peaked in March of 2021. Since then they have fallen 2.4 percent. Such weakness is consistent with recession. 

Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession

For discussion, please see Expect a Long Period of Weak Growth, Whether or Not It's Labeled Recession

Cyclical Components of GDP, the Most Important Chart in Macro

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If you missed it, please note Cyclical Components of GDP, the Most Important Chart in Macro

My follow-up article was A Big Housing Bust is the Key to Understanding This Recession

Housing leads recessions and recoveries and housing rates to be weak for a long time.

Add it all up and you have the opposite of the Covid-recession, a long period of economic weakness with minimal rise in unemployment.

Prime Day Falls Flat, Black Friday in October Again

Yesterday, I commented Prime Day Falls Flat, Black Friday in October Again, Who Cares?

The September retail sales report is out tomorrow. The Bloomberg Econoday consensus is for a 0.2 percent rise. I'll take the under.

Regardless, its "real" inflation-adjusted sales, not nominal sales that drives the CPI, and the CPI rose 0.4 percent. 

It does not matter whether you label this a recession or not. Besides, the NBER might not even announce the recession until it's over. That happened once already.

What does matter is the Fed will likely keep hiking until the economy collapses. It won't be fun.

This post originated at MishTalk.Com

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