Here's what we got.
Advance estimates of U.S. retail and food services sales for August 2019, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $526.1 billion, an increase of 0.4 percent (±0.5 percent)* from the previous month, and 4.1 percent (±0.7 percent) above August 2018. Total sales for the June 2019 through August 2019 period were up 3.7 percent (±0.5 percent) from the same period a year ago. The June 2019 to July 2019 percent change was revised from up 0.7 percent (±0.5 percent) to up 0.8 percent (±0.1 percent).On the top line, that doesn’t seem too bad, and certainly doesn't sound recessionary. But then get beyond the distortions of a surprisingly strong bounce-back month for autos (+1.8% vs +0.1% and July) and a drop in gasoline sales due to lower prices (-0.9% vs +1.4% in July), and let's dig into the "core" retail sales."
Retail trade sales were up 0.6 percent (±0.5 percent) from June 2019, and 4.6 percent (±0.7 percent) above last year. Nonstore retailers were up 16.0 percent (±1.4 percent) from August 2018, and motor vehicles and parts dealers were up 6.8 percent (±1.9 percent) from last year.
That ended up being a relatively tame 0.1% increase in August after a strong 0.8% in July, which makes you wonder if the concerns about trade wars and a potential recession that emerged in August made Americans hold back a bit. As the release mentions, non-store retailers like Amazon continue to boom, but brick-and-mortar stores did very poorly in a month that is key for retail with back-to-school shopping.
Change in retail sales, August 2019
vs July +1.6%
vs Aug 2018 +16.0%
vs July -1.1%
vs Aug 2018 -5.4%
Clothing and Clothing Accessory stores
vs July -0.9%
vs Aug 2018 +0.4%
Furniture and home furnishing stores
vs July -0.5%
vs Aug 2018 +0.1%
Electronics and Appliance stores
vs July -0.02%
vs Aug 2018 -3.5%
Given that the stock market has bubbled back up in September, the trade war talk has died down, and consumer sentiment has improved a bit after a big drop in August, let’s see if the core retail sales bounce back to round out the 3rd quarter.
If it doesn’t, that’s a big red flag for future growth prospects, as the US consumer was the only thing keeping the economy afloat at the end of the Summer. And if spending is cooling with the weather, the spiral toward recession may be hard to stop for 2020.