US Retail Sales Disappoint, Despite the Headline Jump

Retail sales have been mostly missing expectations in the US during the last several months, but today’s report showed an increase above anticipations in August. Traders were expecting headline retail sales to decline by -0.1% in August as gas prices cooled off, with core sales (excluding auto sales) reading expected to be flat (0.0%).

The back-to-school season was in full swing last month as preparations usually take place in August, and with effectively all schools back to in-person classes this year, expectations were for a slight boost over last year’s figures, where some students and school districts opted instead for remote learning. Although after that didn’t help retail sales much, while the improvement came from car sales.

August 2022 US Retail Sales Report

• August advance retail sales +0.3% vs 0.0% expected
• July sales were 0.0%, revised to -0.4%
• Core sales excluding autos -0.3%% vs +0.1% expected
• Prior ex-autos +0.4%
• Control group 0.0% vs +0.5% expected
• Prior control group +0.8%
• Ex autos and gas -0.3% vs +0.7% prior
• Retail sales 9.7% YoY unadjusted for inflation 9.1+% vs +10.1% prior
• Sales ex-gasoline stations unadjusted for inflation +29.3% vs +7.8% prior

Falling gas prices in August were a drag on overall spending but put money in consumer pockets to spend elsewhere. The headline is strong but it gives the wrong impression. Auto sales make this mediocre month look good. The control group was meaningfully weaker than expected and the prior gain was cut in half. Remember that retail sales are unadjusted for inflation so if you go back to March, there’s been very little growth in nominal spending while inflation has continued to ratchet. That leaves real spending in negative territory.