Friday, February 19, 2021

Retail sales up seasonally for January, but not necessarily in reality.

Even while Americans were still losing jobs in big numbers in January, they were buying items in full force (for January, anyway).
Advance estimates of U.S. retail and food services sales for January 2021, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $568.2 billion, an increase of 5.3 percent (±0.5 percent) from the previous month, and 7.4 percent (±0.7 percent) above January 2020. Total sales for the November 2020 through January 2021 period were up 4.6 percent (±0.5 percent) from the same period a year ago. The November 2020 to December 2020 percent change was revised from down 0.7 percent (±0.5 percent) to down 1.0 percent (±0.3 percent).
WOW! Where did that come from? It was wide-ranging, too, with every sector measured by the Census Bureau going up, and even the beaten-up sector of bars and restaurants (+6.9%), electronics/appliance stores (+14.7%) and clothing stores (+5.0%) had sizable jumps in seasonally-adjusted sales.

Ah, but there’s the catch – the seasonal adjustment. January always has a falloff from December in retail sales as Holiday shopping season ends, it’s just a question of whether it’s more of a falloff than normal. And so in January 2021, that falloff was less than we usually see, which translated into a large “gain” in sales.
Which makes me wonder that if the COVID World moderated the seasonal changes that we usually see in retail sales. Maybe those declines in November and (especially) December are less of a reflection of a major economic slowdown (as I feared), and simply a reality that things don’t change much day-to-day, and that major family get-togethers were blunted at the end of 2020 among those who respected the virus.

Likewise, there would be as much of a number to drop off from in January, but the model doesn’t reflect that. So instead of a bounce-back, maybe it means that things are just stagnated right now, and that February’s totals might give us a better indication of whether the consumer is actually coming back or not.

Even with these seasonally adjusted oddities in January, the year-over-year change in sales across sectors gives you a real indication of how spending habits have changed in the COVID World. Online shopping has done great, as have stores that sell items to be used around the house. Meanwhile, traditional mall sectors are down, and bars and restaurants have had the biggest falloff of all.
It illustrates that many areas were still depressed in early 2021, and how we could see the winners and losers switch as more people are vaccinated. But we’re several months from being at that point, and in order to keep job losses from continuing, we need strong consumer spending and confidence across the board.

And doing so will require more than the $600 check from 6 weeks ago that has already been spent or banked. So get to it, Congress!

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