This is one of the most important indicators I look at, because it tells us so much about consumers, and since consumption leads employment, it gives us information about the trend in that as well.

In April, nominally retail sales rose 0.1%. But because consumer prices rose 0.2%, real retail sales declined after rounding by -0.2% (blue in the graphs below). In recent months I have also been calculated real sales excluding shelter, because that has been distorting the CPI. This month the result was the same: real retail sales ex-shelter were down -0.2% (gold). In the below graph I also show real personal consumption expenditures for goods (red), which tends to track real retail sales well, but won’t be reported for several more weeks:

(Click on image to enlarge)

With rare exceptions - one of which was in 2023-24 - when real retail sales are negative YoY, a recession has followed shortly. In the past 12 months, real retail sales YoY have been positive, and was so again in April, up 2.8%. Excluding shelter, real retail sales were up 3.7%:

(Click on image to enlarge)

These are strong positive readings, and as so much I have reported on in the past few weeks, almost certainly have been affected by consumers front-running price increases and shortages anticipated from tariffpalooza.

Finally, let’s compare the YoY% changes with their potential effects on employment (red):

(Click on image to enlarge)

The good news is that these imply that the YoY% change in employment should hold steady or even improve a little bit in the next several months. Given that all but one month last spring and summer shoeed under 150,000 gains in employment, this implies job gains in the 150,000-200,000 range.

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