October 2019 Retail Sales

Retail sales gained back all the prior period’s losses and then some in October 2019 according to the latest data from the Census Bureau.  This indicator rose $526.5 billion to start the final quarter after declining $525.2 billion in September.  Year-over-year, retail sales are up 3.1 percent.

Details were mixed in the report.  Motor vehicle sales did well, rising 0.5 percent.  Similarly, food and beverage stores were also up 0.5 percent, and grocery stores’ receipts gained 0.4 percent.  Accelerating gasoline prices helped boost petrol stations’ revenue which surged 1.0 percent.  General merchandising stores added 0.4 percent.  Nonstore retailers were up 0.9 percent, contributing to their 14.3 percent gain versus a year ago.  But it wasn’t all good news.

Other areas of the report lagged.  Furniture and home furnishing stores experienced declines totaling 0.9 percent.  Likewise, electronic and appliances stores’ revenues dropped 0.4 percent.  Receipts at sports and hobby retailers fell 0.8 percent, and the toplines of clothing stores were 1.0 percent lower in aggregate.  Making matters worse, Atlas’ favorite line in the report weakened.

Food services & drinking places suffered a 0.3 percent setback to their total revenues.  While it is only one month, it raises eyebrows at Atlas because it suggests consumers were less willing to spend money on discretionary eating, which could coincide with a change in Americans’ confidence.  For now, we’ll wait to see how this item does in November, but we aren’t satisfied with October’s result.

Our economy depends on consumers.  They are the largest contributors to our nation’s output and currently have the best rate of change (i.e., growth) of all the components in America’s economy.  Due to this size and rate of change combination, any extended deterioration in consumption will need to be met with a much more substantial uptick in other areas of output if gross domestic product is to maintain a reasonable growth rate.  But we should reiterate, food & drinking places fell for just the month, so there is not a new trend in place, but this setback is being noted here at Atlas as it could be a harbinger of changing consumer behavior.