Retail sales stay flat as inflation remains elevated
REAL ECONOMY BLOG | October 14, 2022
Authored by RSM US LLP
American consumer spending was unchanged in September, held back mainly by auto and gasoline sales as prices at the pump and auto dealers fell on the month, the Commerce Department reported on Friday. The data was not adjusted for inflation.
With inflation controlled for, sales volume was also flat despite inflation coming out hotter than expected, our estimate shows. Goods prices actually fell on the month, enough to offset the increase in the cost of food services.
Inflation-adjusted sales have remained stagnant since the middle of last year as the Federal Reserve has aggressively raised interest rates this year.
Stripping out the most volatile categories like gas, auto, food services and building materials, the control group—which feeds into the calculation of gross domestic product—rose by 0.4% on the month.
August’s reading was also revised up to 0.2%. That should give our forecast for GDP growth in the third quarter a slight boost from the current level of 2.5%.
The sales data most likely understated how solid American spending growth has been because most services were not included.
There are reasons to expect retail sales volume to grow faster in October and November as retailers have started to offer discounts geared to the holidays much earlier than in previous years because of excess inventories. Amazon’s second Prime Day of the year in October should also boost online sales.
The risk to the outlook continues to be inflation, especially the rebound in gasoline prices ahead of the winter as a cut in crude oil supplies by OPEC+ looms.
In recent months, whenever there has been an increase in gasoline prices, sales of discretionary items have fallen as consumers rationed their spending.
Inside the data
Inside the report, sales dropped in seven out of 13 categories, with the largest drops coming from miscellaneous stores and gasoline stations, down by 2.5% and 1.4%, respectively.
Sales rose the most at department stores and online, up by 0.7% and 0.5%, respectively. Despite Hurricane Ian, sales at restaurants rose by 0.5%, mostly because of price increases.
Call us at +1 213.873.1700, email us at firstname.lastname@example.org or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Tuan Nguyen and originally appeared on 2022-10-14.
2022 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.