Retail sales were strong in May but the overall trend is nothing but inflation.
Please consider the Census Department report on Advance Retail Sales for May of 2026.
Advance estimates of U.S. retail and food services sales for May 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $763.7 billion, up 0.9 percent (±0.4 percent) from the previous month, and up 6.9 percent (±0.5 percent) from May 2025.
Total sales for the March 2026 through May 2026 period were up 5.3 percent (±0.5 percent) from the same period a year ago. The March 2026 to April 2026 percent change was revised from up 0.5 percent (±0.4 percent) to up 0.4 percent (±0.2 percent).
Retail trade sales were up 1.0 percent (±0.4 percent) from April 2026, and up 7.5 percent (±0.5 percent) from last year. Nonstore retailers were up 12.2 percent (±1.8 percent) from last year, while food services and drinking places were up 2.7 percent (±1.8 percent) from May 2025.
The key phrase above is “adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.”
The report only lists nominal sales, not real (inflation-adjusted sales). It’s real sales that feed GDP.
Real vs Nominal Retail Sales
Real vs Nominal Retail Sales Month-Over Month Percent Change
- Nominal Total: 0.9 percent
- Real Total: 0.4 percent
Over half of the gain in May was inflation.
Real Advance Retail Sales Month-Over-Month
Real Advance Retail Sales Percent Change Month-Over-Month
- Total: 0.4 percent
- Excluding Motor Vehicles: 0.3 percent
- Excluding Motor Vehicles and Gas: 0.1 percent
- Motor Vehicles: 0.7 percent
- Food Stores: -0.5 percent
- Nonstore Sales: 1.0 percent
- Gas Stations: 2.9 percent
For nominal numbers, add 0.5 percentage points to the above numbers. Result may be off by 0.1 percentage points due to rounding.
May was strong led by nonstore sales and motor vehicles.
Excluding motor vehicles and gas, sales were only up 0.1 percent.
Real vs Nominal Retail Sales Detail
Real vs Nominal Sales Notes
- Real retail sales peaked in March of 2021 at 233,440. They are now 228,669 That’s a decline of 5,682 or 2.0 percent.
- In March of 2021, nominal sales were 603,581. They are now 763,707. That’s an increase of 153,504 or 26.5 percent.
Over 100 percent of the increase in retail sales since March of 2021 is due to inflation.
Yet, I can guarantee there will be numerous comments from mainstream economic illiterates today about the “strong consumer”.
Oh, and didn’t someone campaign on fixing this?
Real vs Nominal Advance Retail Sales Percent Change from Year Ago
Percent Change from Year Ago
- Nominal retail sales year-over year are up 6.9 percent
- Real retail sales year-over year are up 2.6 percent
Over 62 percent of the reported year-over-year retail sales is a mirage of inflation.
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Let’s discuss goods and services. The latter is 63.4 percent of the CPI.
Hedonic adjustments are mostly insignificant
They can matter a lot to some things but those things are very tiny percentages of the CPI
The big problem are things not included: Homeowners Insurance, Property Taxes, and weight of food at home vs away
The real inflation is hidden in hedonic adjustments, as I experienced in the bike shops. Prices are off the chart compared to 10 years ago.
Who published the shopping cart of hedonic adjustments?
Hedonic adjustments are mostly insignificant
They can matter a lot to some things but those things are very tiny percentages of the CPI
The big problem are things not included: Homeowners Insurance, Property Taxes, and weight of food at home vs away
“Oh, and didn’t someone campaign on fixing this?”
He also campaigned on no new wars, and we all know how that went.
The fed unanimously held rates steady. Wonder how Trump will react?!
Inflation has always been and will foreverbe with us until we realize that “free” market theoretics is a misnomer and a fraud no matter whether of the libertarian and neo-liberal variety.
The above fact and the additional fact of the present monopoly paradigm for the creation and distribution of all new money being Debt Only are the core problems…that the new paradigm of Strategic Monetary Gifting resolves to the benefit of every economic agent.
If you want beneficial price and asset deflation without all of the pain libertarians blithely overlook and the liberals mistakenly think higher taxation and non-strategic monetary spending will resolve, then take a look at the 50% Discount/Rebate policy at the points of regular consumer retail sale and the retail point of Finance…until you can no longer deny its incredible temporal universe effects.
What puzzles me is, if we have the inflation numbers (as cooked as one might think they are), why do we continue to report nominal sales as the headline number UNLESS it is to always overstate by said rate of inflation for effect. Even if they didn’t have the inflation numbers, reporting nominal numbers never gives a true picture and always forces one more calculation. You’d be better off waiting a few days in that case.
Doing it this way is like temping a cooked piece of chicken but putting the probe too close to the pan or flame–and yet they continue, month after month.
Cannot imagine this “release” is a surprise to anyone who is actually paying attention.