Economists expected a December rise in retail sales of 0.4 percent. Instead, consumers went on a spending spree. But two-thirds of that was due to inflation. Real (inflation-adjusted) sales rose 0.2 percent.
Advance Retail Sales for December
The Commerce Department reports the Advance Estimates of U.S. Retail and Food Services for December.
- Advance estimates of U.S. retail and food services sales for December 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $709.9 billion, up 0.6 percent (±0.5 percent) from the previous month, and up 5.6 percent (±0.7 percent) above December 2022.
- Total sales for the 12 months of 2023 were up 3.2 percent (±0.4 percent) from 2022. Total sales for the October 2023 through December 2023 period were up 3.9 percent (±0.4 percent) from the same period a year ago.
- The October 2023 to November 2023 percent change was unrevised from up 0.3 percent (±0.3 percent)*. Retail trade sales were up 0.6 percent (±0.5 percent) from November 2023, and up 4.8 percent (±0.5 percent) above last year.
- Nonstore retailers were up 9.7 percent (±1.6 percent) from last year, while food services and drinking places were up 11.1 percent (±2.3 percent) from December 2022.
Real vs Nominal Advance Retail Sales Month-Over-Month
The key phrase in the report is “adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.”
It’s real (inflation-adjusted sales) that matter to GDP. The Commerce Department does not provide that calculation but I do.
Real vs Nominal Advance Retail Sales Since 1992
Real retail sales peaked in April of 2022 (yellow highlight).
Real vs Nominal Advance Retail Sales Detail
Retail vs Nominal Chart Notes (Millions of Dollars)
- Real retail sales peaked in April of 2022 at 234,190. They are now 229,840. That’s a decline of 1.8 percent.
- Nominal retail sales were 675,899 in April of 2022. They are now 709,890. That’s a rise of 5.0 percent.
In the last 20 months, nominal sales are up 5.0 percent but real sales are down 1.8 percent.
Great Consumer Demand?
What appears to be great consumer demand is mostly an inflationary mirage.
The situation looks better on a year-over-year basis.
Real vs Nominal Retail Sales Percent Change From Year Ago
Retail sales are up 5.59 percent from a year ago. Real sales are up a reasonably strong 2,21 percent.
Most of that is a strong December on top of a very easy year-over-year comparison.
Fueled by Debt
Total consumer credit, revolving credit, and credit card interest rates all hit new record highs in November.
Consumer Credit Hits Record $5 Trillion
To explain the apparent strength in retail sales, please note Consumer Credit Hits Record $5 Trillion, Credit Card Rates Also Record High
Revolving (mostly credit card debt) is at a record high. For discussion, including a calculation of real, inflation-adjusted debt, please click on the above link.
Yep these will be revised DOWNWARD in the next TWO MONTHS..
And the sheeple will quickly forget this propaganda!!!
As soon as I seen the msm headline I was like yeah right, things cost more so people spent more. What a mess.
Retail sales were +0.6% and CPI was +0.3%. how do you get real retail sales down to+0.2%?
The numbers are from the government, thus, must be assumed incorrect from the get-go in the administration’s favor. These will be adjusted as will every other report through election day and beyond. Government/Fed has backed itself into a fiscal and monetary corner that cannot withstand the truth, therefore they will not and in their view, cannot report truthfully.
So over the course of the “Last 5 Months”, we have seen an “Advanced Real Retail Sales” growth of .07% In Total or .014% Per Month!
Bidenomics @ Work…
What are the odds that these massively inflated data get revised lower like every other economic data the last 2 years?
I am going with 100% chance its revised lower
The kids using BNPL may be on to something as they are buying.a ton of shit this way and with credit cards and have NO intention of EVER paying it back. They have realized they will never afford anything so their credit score doesn’t matter……. the Federal Reserve and US Government have taught them well how to be financial scumbag grifters
When the reported inflation numbers are lower than actual then of course you see a increase in sales/ GDP. The GDP has been shrinking for years. Empty office buildings, store fronts, retail bankrupcy/closures… Every financial construct is skewed from the distorted “official” inflation numbers. A topic Mish has yet to explore…
More Games . . . Retail Sales are up because Inflation is up . . . Consumer Credit is going to take a major hit in 2024.
Retail sales are more likely flat as inflation is understated. In manufacturing, we are seeing prices rising again but at a slower rate. I’m still betting that the Fed will declare victory, lower rates and eventually return to QE. When the bank term funding program ends, they will either need QE or a big drop in rates to support the banks.
My bet remains on stagflation.