December 2018 Retail Sales

Americans consume a lot.  So much so that just one economic indicator represents roughly two-thirds of our nation’s output: retail sales.  Unfortunately for the economy, the Census Bureau’s December 2018 iteration of this indicator was weak.  While adjusted for seasonality but not prices, receipts were down 1.2 percent as last year ended.

As one might expect with such a dour headline, the details contained many minus signs.  For instance, spending at sporting goods, hobby, musical instrument, & book stores were off a whopping 4.9 percent; that doesn’t sound like a fun holiday season.  Nonstore retailers (think online stores) declined 3.9 percent as well.  Department store revenues fell 3.9 percent as well.  Additionally, gasoline stations were hit with a 5.0 percent drop, but that is probably due to changes in petrol prices.

Even Atlas’ favorite component weakened.  Tabs at food services and drinking places dropped 0.7 percent.  As you may recall, Atlas loves this component because it represents the most discretionary spending possible.  Eating away from home is a luxury easily replaced with meals in ones’ own kitchen.  If this category continues to weaken in a pronounced way, it could portend a change in consumers’ behavior. 

On its own, this report looks grim.  But don’t worry because Friday is right around the corner.  No, we aren’t telling you to start the weekend early.  Instead we want you to stay tuned for tomorrow’s note which will address some issues in the report which could cause positive wholesale revisions in next month’s release.