Retail sales forecasted to have increased in August actually decreased by 0.2%. Retail and food services sales gained 3.2% for the 12 months ending August 2017. What does this mean? Is the consumer pulling back on their purse strings and curtailing spending? These are questions that mindful investors are rightfully asking themselves. As with most things financial, the answers are rarely straightforward.
The Census Bureau’s retail sales report provides a look back in history that can help put things into context. The chart below illustrates total retail sales growth annually since 1993. Other than the notable declines during the technology bust in 2000 and housing crisis in ’08-’09, retail sales have posted positive yearly gains. Retail sales have averaged 4.3% annual growth throughout this quarter century. Of late,there has been a slowdown; in the past 24 months the average increase has been running around 3.3%. So, the 3.2% growth figure for the 12 months ending August is within reason.
Retail sales are important to both our economic outlook and standard of living. Things are constantly changing and evolving. The next chart details the categories where folks are choosing to spend, and not spend, their money. Market enthusiasts and savvy opportunists are wise to heed these directional movements. Long term investors that are tracking retail sales closely notice that non-store retail growth of 8.4% is far more than total sales growth at 3.2%. Speculators that assume the future is dim for department stores, book retailers, music vendors and the like are prone to short specific companies within these industries. There’s a lot to learn from diving deeper into the Census Bureau’s Advanced Monthly Sales Report.