The Census Bureau Advance Retail Trade report shows retail sales unexpectedly fell 0.2% in in August.
More importantly, the Census Bureau revised July from plus 0.6% to plus 0.3%. On top of that, the census bureau revised June from +0.3 to -0.1!
Bloomberg Econoday attempted to whitewash this mess, blaming it all on Hurricane Harvey.
Excuse me for asking but did economists not know there was a hurricane?
Soft is the assessment for the latest retail sales report which shows early Hurricane effects for some components and also downward revisions to prior months. Headline sales fell 0.2 percent which is near Econoday’s low estimate with ex-auto sales up 0.2 percent and just below the low estimate. The Commerce Department could not isolate the impact of Hurricane Harvey’s late month hit on Houston but weakness in auto sales, which fell 1.6 percent, and strength at gasoline stations, up 2.5 percent on higher prices, do hint at such an impact.
There are not many signs of fundamental strength in August though restaurants did rise 0.3 percent with furniture up 0.4 percent and general merchandise making the plus column at 0.2 percent. Otherwise, give back is apparent in nonstore retailers, which have been very strong but fell 1.1 percent in August, and also building materials, down 0.5 percent after two sharp prior gains. Apparel is also weak, down 1.0 percent but again following solid gains.
Turning back to revisions, they also include a 4 tenths downgrade to June’s headline from a 0.3 percent gain to a 0.1 percent decline. But core readings show less revision with ex-auto ex-gas unrevised for July though revised lower for June, down 4 tenths to minus 0.1 percent, and with control group sales also unrevised in July but revised down 3 tenths in June to a 0.1 percent gain. Nevertheless, the ex-auto ex-gas reading for August, at minus 0.1 percent, is telling as it excludes the two components that are most likely to take initial hits from the hurricanes.
This report scales back what had been an accelerating pivot higher for consumer spending which nevertheless remains on course as a contributor to third-quarter GDP. Yet the effects of Harvey, and also of course Hurricane Irma, still have to play out making September’s consumer spending results a difficult call.
Reflections on “Bizarre” Sales
Last month I commented “Supposedly, motor vehicle sales were 1.2% in July following a 0.9% gain in June. This is unbelievably bizarre in the face of actual auto sales reports.”
Today, we found out just how “bizarre”.
Mike “Mish” Shedlock
What’s happening with household formation numbers ?
that’s usually a big driver of retail
I know there is a problem. Inbev beer brands are on sale for fifty cents a can.
Stuki Moi said:
Beer cheaper than water, sure does hint at trouble on the way………
Houston Metro area has a population of roughly 5.5 million. More than Houston was effected, lets say 10 million. The US has a population of roughly 325 million, so (10/325)*100% = 3%. Ok so 3% of the population was taken off for 7 days out of 31. Harvey struck Aug 24th. So the expected decline should be 3%(7/31) = 0.7%. In reality, more stuff was bought in the days leading to landfall. The stores were sold out and I think there was still some commerce during the last week of August, but the 0.2% drop can be easily attributable to Harvey.
Yes, it seems to me that the hurricane should have increased retail sales….
Is it just me noticing that over the past 10years this seems to be a common game of releasing current data on the economy slightly higher to help the markets or to avoid any signs of trouble, then no worries we’ll re-adjust lower after a couple months when the market doesn’t care about old data points .
I think the revisions have gone both ways, but only the positive ones make the news.
Tony Bennett said:
“Today, we found out just how “bizarre”.”
Yep. Bullz need to do some explaining. $4.5 billion of total sales (for June and July) vanished with this report. About 0.5% of total.
When the dollar loses ten percent of its value then stock prices must compensate by rising ten percent.
Medex Man said:
These are the same mental giants running around telling us there is deflation while the cost of living climbs 5-6% a year.
As at least one other commenter mentioned already, lots of people race out and buy water, gasoline, non-perishable foods, etc in preparation for a major hurricane. Harvey struck during August, and Irma was already on some people’s radar. If anything, hurricane prep sales should (all else equal) have increased retail sales a bit (some sales get pulled forward, other sales like bottled water and evacuation gasoline are extra sales).
A lot of back to school sales were in early August (and late July) this year, which all else equal should have slightly bumped retail sales upwards…
Strip out the hurricane increased sales, and the rest of retail must have been a disaster.
For all those overpaid Wall Street “analysts” that didn’t see this coming, you probably won’t see your own pink check coming either. Consumers are out of money, out of credit, deep in debt, and have uncertain job prospects…
Also, anyone who finds a spare penny has that penny stolen to pay for Obamacare costs, whether its premiums, deductibles or government driven demand/price increases. F U Obama.
Some big ticket boxed items were bought prior to Hurricane. Portable generators etc. Some will return boxed but there would have been an uptick prior to Hurricane hitting. Add in hotel spends outside of effected areas as people move out for a few days.
Medex Man said:
Ooops, I completely forgot about returns… that’s becoming almost as big a category as sales as online retailers offer “no hassle, prepaid shipping, free returns” to encourage customers to try items.
That’s the fastest growing category for online retailers…
Visited a ford dealership yesterday and was the only customer besides a lady reading a book. They started out on how much could I put down and if I knew my credit score. They have been burned by sub-prime borrowers and are being more selective today. Looking at all the stickers, the average monthly payment is pushing $500 leaving very little for discretionary spending with so many poorly paid jobs today. Our online stores are very slow right now and we don’t see it getting better for the holidays. Betting Christmas is a total bust this year.
Why would I trust retail sales numbers from the census bureau? I barely trust their population counts.
Ted Fiolek said:
How does a hurricane in late August cause negative retail sales growth in June?
“How does a hurricane in late August cause negative retail sales growth in June?”
It does not. But they always need something to blame in order to keep the ‘Economic Recovery’ narrative alive even though NOTHING HAS BEEN FIXED!