Reclaiming Common Sense

We are already on track for a record retail sales year.

We have record levels of workers, jobs, and wages, which should boost sales.

This year we have had record setting retail sales for each of the first six months of the year. Four of the first six months of the year, We have a record level of workers, jobs, and wages. This month has some significant differences between the month to month data and the July to July data, as well as the Seasonally adjusted data versus the non-seasonally adjusted data. What can we expect for same month growth, rolling year growth, and current year growth?

The Non-seasonally Adjusted (NSA) month to month growth should be largest in four sectors. The growth sectors this month are Clothing and Clothing Accessories (CA,) Non-Store Retail (NSR,) Furniture and Home Furnishings (FHF,) and Food and Beverage Stores (FBS.) It may come as a surprise to some that Building Material and Garden Equipment (BMGE,) Health and Personal Care (HPS,) Sporting Goods, Hobbies, Books and Music (SGHBM,) and Miscellaneous Sales (MUSC) should all drop month to month. People who were going to by Hobby Items or House and Garden items, presumably, would have both these things during April, May or June. We could see a month to month drop in sales of 0.5%  to an increase of 2.25% in sales.  It is important to note that even if month to month sales dropped by 2% the monthly sales would still be roughly $510 billion. This would be the fifth consecutive month over $500 billion. This would also be higher than July 2018.  It is also important to note that month to month NSA sales have dropped during July 2016, July 2017, and July 2018.

The Seasonally Adjusted Growth is anticipated in only five sectors. BMGE, MISC, NSR, and Food and Drinking Places (FDP) are all expected to rise. Gasoline Station Sales (GASS) traditionally rise dramatically during July as people start driving "everywhere." HPC and SGHBM should drop month to month even after seasonal adjustments. We should also expect seasonally adjusted declines in CAC, HPC, GASS, and FHF. The seasonally adjust  growth month to month could range from a drop of 0.04% to an increase of 0.50%

Non-Seasonally Adjusted July to July Growth is expected in all sectors. The largest growth sectors are expected to be GASS, NSR, Food and Drinking Places (FDP,) CAC, and HPC. Will Gasoline Station Sales really be that strong?  The NSA July to July growth rate is expected between 3% and 7%. We have only been above 5% for same month growth once this year. Expect July Only growth of roughly 5%.

Seasonally Adjusted Month to Month growth is expected in five sectors. The largest growth is expected in BMGE, GASS, NSP, MISC, and Food and Drinking Places. Month to month the SA MARTS data could range from a drop of 0.04% to a rise of 0.50%

Seasonally Adjusted July to July Growth could see a decline in Sporting Goods, Hobbies, Books and Music. Gasoline station sales are expected to spike as are NSR, FDP, and CAC. Furniture and Furnishing sales, as well as HPC, Electronics and Appliance (EAS) Sales, and Food and Beverage Store Sales are all expected to rise by 4% to 5%. We could see 2% July to July growth or 4% or 6% or 8%.  Expect a number between 4.5% and 5.5% for July only growth.

The Current year data, as reported in the last report is up 2.9% through June. If we grow by 3.0% then the July level of sales should be $530 billion. Last June we had $2.920T year to data sales, last July it was $3.428 trillion. This June we were at $3.001 trillion. The June MARTS report can be found here.

The Rolling Year data has been slowing from its 5% rate last Summer. Last month the RY growth rate was 3.65%. This will place us at roughly $6.147 trillion in total NSA sales by the end of December. This would be another record year. If we have a RY rate of 3.55% that would drop to $6.141 trillion. If that number comes in at 3.70% then we could hit $6.15 trillion by the end of the year. This would be our second $6 trillion retail sales year.

Retail sales should revive GDP. What is important to understand is that if we can keep the retail sales growing at over 3.5% non-seasonally adjusted, then the annual GDP should be over 3% by the end of the year, seasonally adjusted. We are seeing Gross Private Domestic Investment increasing Same quarter to same quarter by 4.1% or more during the past two years. Government Consumption Expenditures have been rising. Retail sales make up a large portion of the Personal Consumption Expenditures Category. Was the drop in same month sales this year a similar downward drop as we saw during 2014 and 2016? Possibly.

If we see a month to month drop in retail sales, seasonally adjusted or non-seasonally adjusted, this would be fairly normal. We should see some sectors drop month to month, multiple sectors, NSA and SA. July to to July data should rise for all sectors SA and NSA, with the potential exceptions of Electronics and Appliance Sales and Sporting Goods, Hobbies, Books and Music as these sales move to "non-store Retail."