See-Saw Retail Sales

The Census Bureau's latest U.S. retail sales numbers — released on Thursday — show just how volatile this particular metric can be.

Once again, the Census Bureau’s latest U.S. retail sales numbers — released on Thursday — show just how volatile this particular metric can be. In July, total retail sales were up 0.6 percent over June, a nice upward swing following the 0.3 percent drop from May. Before that, sales were up, but before that, they were down. See-saw, yo-yo, roller coaster — pick your metaphor. Part of the movement is because the bureau adjusts for seasonal variation and holiday and trading-day differences but not for price changes, so a thing like changes in the price of gas have an outsize impact on retail sales in a given month.

The annual retail sales numbers are more telling. The news is moderately good for most retailers, in that there’s some consistent growth in spending. Sales were up 2.4 percent in July compared with a year earlier, which beat the June year-over-year increase of 1.4 percent, and was roughly on par with May, when the annual gain was 2.7 percent. Roughly speaking, then, retail spending is keeping up with, and in fact is a little ahead of, the rate of inflation. Probably not coincidentally, the rate also roughly mirrors the slow increase in consumer earnings in the last few quarters. A bit ahead of inflation, perhaps, but nothing outstanding.

Another consistent pattern are the winners and losers in retail sales, though gas stations are something of an exception, because they depend so heavily on one product that’s tied to a volatile commodity. In any case, gas station sales were more-or-less flat in July compared with June, gaining 0.4 percent, which reflects a modest decrease in the price of gas offset by more miles driven. Compared with a year ago, sales at gas stations were down 15.2 percent in July. It only stands to reason: As of Thursday, according to AAA, a gallon of regular cost an average of $2.618; a year ago, the price was $3.473 per gallon.

Other than gas stations, among the other retailers suffering annual declines in July 2015 were, as usual, department stores, down 2.7 percent, which can be taken as a sign that department stores, at least mid-market operations, are on their way to being things of the past. Take Sears, for example. Just last week, Sears Holding Corp. reported a 10.6 percent drop in same-store sales in the second quarter (including both Sears and Kmart), its second consecutive quarter of double-digit declines. Some year-over-year winners, by contrast: food and drinking places, up 9 percent; car dealers, up 7.1 percent; and nonstore retailers, up 6 percent.