January 2018 Retail Sales

Retail sales suffered a setback to start 2018 per the latest data from the Census Bureau.  The headline tally declined 0.3 percent, but it gets worse.  December’s figures were downwardly revised to unchanged after an initial reading of 0.4 percent which should push the nation’s fourth-quarter gross domestic product (GDP) count lower when its revision is released later this month. 

Negative signs were littered throughout the report.  Revenues at building material & garden equipment stores declined 2.4 percent.  Motor vehicle & parts dealers experienced a decline of 1.3 percent from their top lines.  Health and personal care sales dropped 1.2 percent.  Sporting goods, hobby, book, & music stores even suffered a drop of 0.8 percent at their registers.  Nonstore retailers, which have been a strong group recently, went unchanged to start this year.

Fortunately, a few categories were accompanied by positive signs.  Gasoline stations increased sales by 1.8 percent; at least some of this uptick is price related.  Clothing & accessories gained 1.6 percent, but as you may recall from yesterday’s note, apparel prices increased in January, so some of this uptick is caused by higher prices as well.  Department stores also added to the total, gaining 0.8 percent in the period.  Finally, electronics and appliance stores improved their revenues by 0.5 percent. 

Atlas’ favorite segment of this indicator remained unchanged to start the year.  Food services & drinking places experienced virtually no change compared to the prior period.  However, the year-over-year tally decelerated to just 1.8 percent from 4.7 percent in December. 

America’s economy may not be off to a very strong start for 2018, and it may have been weaker to end 2017 than first understood.  Retail sales comprise roughly 20 percent of our nation’s output, so its contraction to start the year and downward revision to end 2017 raises some concern at Atlas.  Retail sales have always been an important indicator, but the most recent data intensifies their importance in the months ahead because they could be foreshadowing an unexpected slowdown in GDP.