July 15, 2014

Retail Sales Disappoint … Again

Filed under: Economy,Taxes & Government — Tom @ 9:15 am

From the Census Bureau:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for June, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $439.9 billion, an increase of 0.2 percent (±0.5)* from the previous month, and 4.3 percent (±0.9) above June 2013. Total sales for the April through June 2014 period were up 4.5 percent (±0.7) from the same period a year ago. The April to May 2014 percent change was revised from +0.3 percent (±0.5)* to +0.5 percent (±0.2).

Before rounding, the increase was 0.245 percent, if that makes anyone feel better.

Expectations were for a 0.6 percent gain. The May upward revision provides some solace, but not much.

The raw (undadjusted) May-June decrease was 5.59 perent. The May-June decrease in 2013 was 5.07 percent. Perhaps that can be explained away by noting that June 2013 had 10 weekend days and June 2014 had nine. I don’t the GDP calculations care about that.

It looks like if second-quarter GDP is going to be decent, significant contributors are going to have to come from somewhere besides personal consumption expenditures.




  1. My math may be off, but seasonally adjusted increase from Jan-Mar 2014 to Apr-Jun 2014 is 2.1%. (429,407 to 438,478) The corresponding increase from 4Q13 to 1Q14 was 0.4%, making a difference of 1.6%. While that is a majority of the 2.9% contraction, 1.3% is going to have to come from somewhere else.

    You notice they didn’t make it easy to compare 1Q14 to 2Q14, just 2Q13 to 2Q14… I wonder why.

    Comment by Scott — July 15, 2014 @ 12:42 pm

  2. #1, I’m not seeing where your quarterly numbers are coming from, but my mind is somewhere else at the moment.

    You have to subtract inflation from this, which may be as much 0.6% this quarter vs. last quarter.

    Comment by Tom — July 15, 2014 @ 1:38 pm

  3. Census.gov provides the following (seasonally adjusted) numbers I used to calculate the 0.4% and 2.1% above:
    Oct-Dec 2013 = 426,522 ; 428,205 ; 427,827
    Jan-Mar 2014 = 423,937 ; 427,554 ; 434,018
    Apr-Jun 2014 = 436,730 ; 438,814 ; 439,891

    Ignore the rest of the analysis as I realize there is no way to actually convert these numbers to GDP “contributions”.

    However, none of this actually matters, as with the annual revision due out the same day, the headline number could be anything.

    Comment by Scott — July 15, 2014 @ 3:14 pm

  4. Okay, I thought there was actual quarterly published data vs. your doing the dirty work. Nice job.

    Comment by Tom — July 15, 2014 @ 4:23 pm

  5. You’ll have to forgive me as I am still learning how all this data is calculated but if my 2.1% is correct that would be 8.5% on an annualized basis? Assumkn this approximates PCE growth, even if inflation comes in at 3% annualized that’s 5% from retail. As the other sections of GDP (net exports, private investment, inventory) were significantly negative last quarter, I would think it would be hard for those items to be as bad as last quarter.

    Now that doesn’t exactly square with my feeling of how the economy, so am I wrong somewhere?

    Comment by Scott — July 15, 2014 @ 9:50 pm

  6. #5 Scott, I end up with 2.3% from the Jan-Mar to Apr-June quarters.

    We also shouldn’t forget that inflation has been more than minor:

    — Dec. to Mar. was 1.4%.
    - Mar. to May (not shown, 237.900) was another 0.7%. June comes out on Wed. or Thurs.

    I think the key here is that “retail sales” isn’t the same as “consumer spending,” which I think (after correction for inflation) is the better proxy for what goes into GDP, and which has come in negative in real terms in April and May.

    If the utilities spending element of “consumer spending” comes way down in Q2 as anyone would expect, retail spending (and other “consumer spending” on things like health care, health and other insurance, etc.) would have to zoom up by much more than you noted to make up for that. April’s and May’s decline in real terms would indicate thhat it hasn’t been happening.

    Comment by Tom — July 15, 2014 @ 11:54 pm

  7. Thanks for helping me Tom, I have appreciated your site for years because it seems to be the best place to go to get business news for people who don’t want it dumbed down.

    Comment by Scott — July 16, 2014 @ 6:46 am

  8. Thanks for the nice words, Scott.

    Comment by Tom — July 16, 2014 @ 7:27 am

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