Economists expected a 0.3 percent decline vs a reported 0.1 percent decline. However, real (inflation-adjusted sales) were down year-over-year for the 10th time in 12 months. Sales are not as strong as they look.
Advance Retail Sales
- Advance estimates of U.S. retail and food services sales for October 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $705.0 billion, down 0.1 percent (±0.5 percent) from the previous month, and up 2.5 percent (±0.7 percent) above October 2022.
- Motor vehicles declined 1.0 percent. Part of this is strike related and part general weakness.
- Excluding motor vehicles and gasoline, sales were a barely positive 0.1 percent.
- Food surged 0.6 percent and nonstore sales (think Amazon) rose 0.2 percent.
- Total sales for the August 2023 through October 2023 period were up 3.1 percent (±0.4 percent) from the same period a year ago.
- The August 2023 to September 2023 percent change was revised from up 0.7 percent (±0.5 percent) to up 0.9 percent (±0.2 percent).
- Retail trade sales were down 0.2 percent (±0.5 percent) from September 2023, and up 1.6 percent (±0.5 percent) above last year.
- Gasoline Stations were down 7.5 percent (±1.1 percent) from last year, while nonstore retailers were up 7.6 percent (±1.6 percent) from October 2022.
Real vs Nominal Advance Retail Sales Percent Change From Month Ago
It’s real spending that drives GDP. Real sales fell 0.1 percent in nominal terms but 0.2 percent in real (inflation-adjusted) terms.
Real vs Nominal Advance Retail Sales Percent Change From Year Ago
Adjusted for inflation, retail spending has not exactly been on a tear.
Real vs Nominal Retail Sales Since 1992
Real vs Nominal Advance Retail Sales Detail
CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
A 2.5 percent decline in energy smoothed the CPI. But for the 27th straight month, the cost of rent rose at least 0.4 percent.
For details, please see CPI Unchanged Thanks to Decline in Energy, but Rent Jumps 0.5 Percent
And what about food? Talk of a tame CPI report this month is entirely an energy mirage and easy year-over-year comparisons. Food is a particular case in point.
The Average Increase in the Price of Food Every Month for 32 Months is 0.6 Percent
For details and discussion, please see The Average Increase in the Price of Food Every Month for 32 Months is 0.6 Percent
Weakness in Cars Explained
Weak retail car sales are largely due to falling demand for EVs. For discussion, please see Wake Up Mr. President, Consumers Want Hybrids, Not EVs
A better title would have been, Wake Up Mr. President, Consumers Don’t Want EVs.
Key Idea of the Day
Perceived overall strength in retail sales is nothing more than actual strength in inflation.
Note the trend on pretty much ALL of the time series in the article. Trend is DOWN. On everything. Including Rent
This one picture tells the retail sales story.
link to cms.zerohedge.com
“A better title would have been, Wake Up Mr. President, Consumers Don’t Want EVs.”
Well put Mish, and I have a theory, mentioned rarely that I see, but very pertinent just the same. In the above, replace Consumers, with Baby-boomers and see if that has a bigger ring to it.
I have aging parents 80+ and actually take care of elderly and currently have two 90+ in my care now. 1 parent lost license and both clients have as well. All had newer cars, and liked them just fine. No desire whatsoever for an EV.
My Parents have friends they and I have known for decades, and the same scenario with all of them that I am aware of.
The Baby-boomers, which are Massive in Size and Money, may have more economic weight than I thought, but i am leaning that way of late. When I remove their numbers (hard to find carved out publicly) from my personal life examples, it is clear to see in most cases.
This could be devastating for EV’s if I am close, because they may have their numbers in the data they are using for decision making (like the Big3 just foolishly made, but I digress). That would give excuses to slow demand for infrastructure, which nobody really has any money for anyway. Go down the chain of impacted resources now no longer needed (China is going through this now I believe), and how do they store it, get money now, stave of payments that will come due, on loans predicated on EV sales.
Food for Thought…
1) The average rent is 2K x12 months = 24K/y. The average house is : 500K.
2) If rent will rise 7%/y in the next twelve years rent accumulation : 24K + 24Kx1.07
+ 24Kx1.07×1.07 +…. 24Kx1.07^10 + 24Kx1.07^11 = 432K.
3) The price of the house should be : 500K + 432K = 932K.
4) If the expected price, after 12 years will be 700K, today prices are too high. The intrinsic value of the house should be about 300K : 300Kx1.07^12 = 675K.
Hey, I’m a rube in trying to interpret economic statistics.
If a car cost $40K in 2022 and now the same car costs $44K in 2023, is that registered as a 10% increase in sales? I want to know if unit volume went up, or only price went up.
In your example the unit volume did not change (1 sold in 2022 and 1 sold in 2023) so it’s exactly the same.
The price paid did change (40->44) but prices are inflation adjusted (see note about that at the top of the article).
Thanks.
Again, while many of your takes are good…
Some of these takes are just silly.
This is absolutely absurd…
“Weakness in Cars Explained
Weak retail car sales are largely due to falling demand for EVs. For discussion, please see Wake Up Mr. President, Consumers Want Hybrids, Not EVs”
There are going to be MORE than 1 Million EVs sold in 2023 in the US.
That’s about a 33%+ INCREASE in EV sales THIS Year2023 vs 2022 in the US.
Clearly DEMAND for EVs is NOT falling…the rate of INCREASE in Demand might be slightly lower than last year but it still a rate of INCREASED Demand for EVs.
So it’s CLEARLY true that ICE automaker sales are falling in the US this year. NOT EVs.
Quite frankly, most of the Weakness in Auto is probably just due to the UAW Strikes over the last couple of months. Nobody who wants to support the UAW was going to buy a vehicle during the strike.
That’s about 1 Million UAW people, in the Auto Industry (Current + Retired), plus probably several Million more relatives, friends, supporters, etc. that aren’t buying vehicles for the last couple of months.
Cheers!
At 1 million that is still only roughly 1/15th of sales. So we have gone from roughly 2% to roughly 6%. And that is with a NetZero madman in charge of government and a whole of government all out blitz to adopt EV
And the demand increase has peaked and is turning down
Should the title be “Retail credit card use was stronger then expected”?
What happens if consumer credit card use is adjusted for the actual cost of living, instead of CPI?
What happens if GDP growth is expressed net of debt growth? Please include all debt, on and off balance sheet. Rhetorical question: was there any GDP growth, net of debt growth?
Retail sales have been negative in 10 of the past 12 months. In that time GDP growth has been 2.6%,2.2%,2.1%, and 4.9%, or right around 3% annual.
So what is holding up GDP? Government spending?
Services and Private Domestic Investment.
Remember also that CPI for stuff sold at retail (like food) is much higher than headline CPI so real sales are down more than the base data might suggest
I’ve heard theories that some of those “never give it up” 3% Home Loans are being refinanced at current rates to extract cash to pay off bills and of course, spend to maintain “lifestyles”.
Seems stupid but one has to remember what we are dealing with here.
Even with the “equity” they didn’t qualify for a HELOC but did for a re-fi.
I’m just giving up waiting for the average ‘consumer’ to be ‘tapped out’. They will go until they can’t otherwise the music plays on.