August Retail Sales Up a Bit

Retail and food services sales numbers are important to many sectors of commercial real estate. And the advance August numbers, according to the Census Bureau, were up 0.3% over July. But before going into the details, it’s important to remember that this data, like many coming out of the Census Bureau, isn’t necessarily that accurate.

As is often true with the agency’s numbers, a proper appreciation for statistics on the part of the Census Bureau demands rigor: “The 90 percent confidence interval includes zero. There is insufficient statistical evidence to conclude that the actual change is different from zero.”

Or that the change was positive. August’s 0.3% number comes with a plus or minus 0.5% interval, which means it might have been as little as -0.2% or as much as 0.8% from July. Similarly, it was 9.1%, plus or minus 0.7% (between 8.4% and 9.8%), over August 2021.

For example, in August, the Census Bureau reported that the advance July number was flat compared to June. This month, the revised numbers showed a -0.4% change between the two months.

You get a little, you lose a little.

But keeping the confidence intervals in mind, “Total sales for the June 2022 through August 2022 period were up 9.3 percent (±0.5 percent) from the same period a year ago.” The summer months might have been up only 8.8% or as much as 9.8%. Either way, it’s a solid improvement over the same period last year, and that is good news.

Or maybe it’s not because the Bureau says that the figures are not adjusted for price changes, which includes inflation effects. It’s tempting to apply the consumer price to the changes to see real change and not nominal, but the CPI includes major factors like housing, energy, food, medical care, and housing. To include inflation, you’d have to take the different categories measured and then apply the appropriate specific inflation factors. Even so, recognizing the rate of inflation suggests that year-over-year increase probably lose much of their brio.

Taking food services out of the equation, retail trade sales were up 0.2% (±0.4%) month over month, and up 8.9% (±0.7%) year over year. Gasoline stations were up 29.3% (±1.6%) over last year, which likely doesn’t surprise anyone who had recently filled the gas tank of a car. Nonstore retailers were up 11.2 percent (±1.2%) year over year.

So, for the core of retail sales, not including gasoline, it’s likely a little improvement over last year, which is better than numbers falling.

But there is some “not all bad news is bad news” comfort. According to emailed remarks from Jeffrey Roach, chief economist for LPL Financial, “July retail sales was significantly revised lower so taken together with the August report, consumer demand for goods is clearly slowing. The decline in demand is exactly what the Federal Reserve wants to see from its aggressive front-loaded rate hikes.”

Maybe a bit more similar bad news could result in an eventual present from the Fed: lower interest rates.