This Typically Occurs At The End Of Expansions

The monthly retail sales comparisons were too hard for April to deal with. This pushed most readings negative for the month which vastly missed estimates. Monthly headline retail sales growth was 0% which missed estimates by 1%. That’s a very big miss. However, the March reading was revised up by 9 tenths to 10.7%. That growth is almost impossible to lap positively. If you take the difference between the revision and the miss, this was only 1 tenth off estimates. Retail sales growth excluding vehicles was -0.8% which missed estimates by 1.6%. This wasn’t made up by the revision which went up 4 tenths to 9%.

Finally, the control group vastly missed estimates. This is the most important reading of every report. Monthly sales growth was -1.5% which missed estimates for 0.1% growth (March revised up 7 tenths to 7.5%). Unless this gets changed, this will be considered a step back for consumers. That being said, we should expect a step back considering the end of stimulus checks. There could be a hiccup where spending falls back to the long-term trend. Areas that were hit hard by the pandemic won’t see this decline, but the areas that were helped will.

The chart above gives somewhat of a preview of what is to come. Food services (restaurants and bars) had 3% sales growth. Online store sales fell 0.6%. While that makes it seem like consumers are shifting back to brick-and-mortar stores, look at how sharp the declines were in general merchandise stores. So far, non-store retail has been more immune to weakness. Let’s see how that progresses as the economy reopens.

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