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 U.S. Census Bureau seasonally adjusted estimates of U.S. retail and food services sales for November were $449.3 billion, an increase of 0.7 percent from the previous month, and 5.1 percent above November 2013. This is slightly higher than overall growth in retail sales for the year, and suggests that demand is growing at about 3 percent above reported inflation.
Year over year growth has been largest for automobile dealers, which have seen sales up by 8.5 percent so far on the year. This is followed by non-store retailers (or internet and catalogue sales) which are up by 7 percent through Nobember. This reflects what has been reported in the news and in other economics statistics in that automotive sales are up substantially as are internet Christmas sales. Retailers seeing year over year declines included department stores (off by 2.4 percent), gas stations (down 1.6 percent) and hobby and toy stores which were off by 1.3 percent. Since these data are not adjusted for prices, the declines in gasoline sales in particular represent pricing reductions rather than physical sales.
The reduction in gasoline prices has been in the news a lot lately, reflecting a production surge by Saudi Arabia. This price reduction has fed through not only to retail sales numbers, but is also reflected in a range of indicators from the PPI to GDP. Without the reduction in gasoline sales, overall retail sales would have been up a substantial 1.2 percent on the month, something which will be reflected in the 4th quarter GDP statistics. However, higher spending does not necessarily mean more economic activity, and one needs to be careful in interpreting how retail sales flow through to the overall economy.
Retail sales figures, while extremely important for many mainstream economists, say little about production or whether the overall economy is strengthening. They do suggest that Americans continue to shop – though the surge in automobile sales is probably over, and the growth in internet sales (which are often just drop shipped from overseas manufacturers) versus sales at full-priced retailers like department stores, and electronics box merchants means that higher retail sales are unlikely to translate into a lot of new jobs.
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