The US Census Bureau’s retail sales figures are based on a random sampling survey of approximately 5,000 retail and food services firms whose sales are then weighted to represent the complete universe of over three million businesses. Responding firms account for approximately 65 percent of the dollar volume estimate. The statistic is an advance measure of overall retail sales, and is important for those interested in the demand side of the economy.
The Census Bureau’s estimate of retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $418.3 billion, a decrease of 0.4 percent from February but up 2.8 percent from March 2012. Total sales for the January through March 2013 period were up 3.7 percent from the same period a year ago, suggesting that demand is just slightly outpacing inflation.
Non-store retailers (or internet and catalogue sales) were up 13.5 percent from March 2012 and auto and other motor vehicle dealers were up 7.4 percent over last year. At the same time, electronics stores and department stores suffered sizable declines in sales off 3.2 and 7.6 percent respectively from the prior year. This mirrors reports that Wal-Mart has seen its shoppers disappear over the past couple of months.
While extremely important for many mainstream economists, the retail sales figures say little about production or whether the overall economy is strengthening. They do suggest that American’s continue to shop – though their focus seems to be gravitating toward general staples like food (which of course is good for grocers). Also, the growth in internet sales continues unabated at the cost of full-priced retailers like department stores, and electronics box merchants.
We believe that continued slow growth in the economy will keep pressure on consumers to search for bargains and to focus their spending on necessities and away from non-essentials. This, of course, does not mean that the overall luxury brand and luxury goods markets will be greatly pinched as they reflect sales from upper income consumers who have been less impacted by the recession, and who are now benefitting from the potential equities bubble.