Retail spending from the commerce department, real (inflation-adjusted) spending by Mish

This morning the Census Department released Advance Monthly Sales for Retail and Food Services for February.

• Advance estimates of U.S. retail and food services sales for February 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $697.9 billion, down 0.4 percent (±0.5 percent)* from the previous month, but up 5.4 percent (±0.7 percent) above February 2022. 
• Total sales for the December 2022 through February 2023 period were up 6.4 percent (±0.4 percent) from the same period a year ago. 
• The December 2022 to January 2023 percent change was revised from up 3.0 percent (±0.5 percent) to up 3.2 percent (±0.3 percent).
• Retail trade sales were down 0.1 percent (±0.5 percent)* from January 2023, but up 4.0 percent (±0.7 percent) above last year. 
• Food services and drinking places were up 15.3 percent (±2.6 percent) from February 2022, while general merchandise stores were up 10.5 percent (±0.2 percent) from last year.

A key point to note is that retail and food services sales are adjusted for seasonal variation and holiday and trading-day differences, but not for inflation.

Real vs Nominal Advance Retail Sales in Millions of Dollars

Real vs Nominal Advance Retail Sales in Millions of Dollars

Real (inflation-adjusted) retail sales have gone nowhere for a year. Actually, they are negative from a year ago. 

Sales peaked at 236,202 on the third and final Covid fiscal stimulus and have generally trended lower since then, albeit in a choppy manner as the January 2023 splurge shows (lead chart).

Only in nominal terms is growth strong.

Real vs Nominal Advance Retail Sales Long Term 

Real vs Nominal Advance Retail Sales in Millions of Dollars since 1992

Inflation Mirage

The above chart puts everything into proper perspective. The notion of strong consumer spending is an inflation mirage. 

Wages have not kept up with inflation so real spending is in decline.

For a look at the CPI numbers used to calculate real sales, please see Nothing Tame About the CPI, Just Elation Over Interest Rate Hike Odds

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