Advance estimates of U.S. retail and food services sales for July 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $523.5 billion, an increase of 0.7 percent (±0.5 percent) from the previous month, and 3.4 percent (±0.7 percent) above July 2018. Total sales for the May 2019 through July 2019 period were up 3.3 percent (±0.5 percent) from the same period a year ago. The May 2019 to June 2019 percent change was revised from up 0.4 percent (±0.5 percent)* to up 0.3 percent (±0.1 percent).And that increased sales number was still strong when you throw out a distortion from the 1-month increase in gas prices, at 0.6%. Grocery stores had sales up by 0.7%, and food and drinking places were up 1.1% for the month. The good retail sales figure led the Atlanta Fed to up its GDP Now forecast for Q3 2019 from 1.9% to 2.2%.
Even beaten-up brick-and-mortar retail such as electronics stores, department stores, and clothing stores all had increases between 0.8% and 1.2% for July.
But those increases pale in comparison to Non-store (usually online) retailers, who had a stunning 2.8% increase in sales for July. Yes, some of that was probably due to Amazon Prime day, but that sector is still up 16.0% from July 2018.
That longer-run growth from Amazon-type retailers is illustrative of a structural shift that continues in spite of the one-month increase in brick-and-mortar.
Change in retail sales July 2018 – July 2019
Non-store retailers +16.0%
Books/sporting goods/hobby stores – 0.5%
Clothing stores -2.4%
Building materials/gardening stores -2.9%
Electronics/appliance stores -3.5%
Department stores -4.7%
So it’ll take more than 1 month of decent numbers from brick-and-mortar to convince me that there won’t be more store closings on the horizon. Just this week, we learned that The Avenue clothing chain will close all 222 of its stores across 33 states, and 26 more Sears/Kmart stores are folding up after hundreds of prior closings.
Store closings have already exceeded the total amount we had in 2018, and could reach 12,000 by the end of December.
That’s a lot of empty lot space to fill, and it seems that this Fall, a sizable percentage of property taxes will get shifted onto homeowners (and that’s before we add in the “dark store” loophole that will burden homeowners in Wisconsin even more). Then realize that a lot of homeowners won’t be able to write off those higher property taxes due to the GOP’s Tax Scam, and it seems like there’s a squeeze on everyday consumers that’s coming. But at least in July, those looming problems weren’t stopping Americans from spending money at the stores.
Granted, in late July the stock market was 1,600 points higher vs now, and “recession” wasn’t on people’s mind. Which makes me curious to see if the recent recession talk will cause people to clamp down on their wallets, a decision that would practically guarantee that there WILL be a recession.
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