Retail Sales Do Add Up

The calendar has been playing an outsized role in economic accounts this year, from leap year adding to February and now different months for Easter. With March entertaining the holiday this year, it seems as if seasonal adjustments might have been unduly harsh with retail sales. Into April, without Easter, seasonal adjustments may have been too charitable. Unadjusted, total retail sales in April 2016 were $450.9 billion, down $9.2 billion from $460.1 billion in March. Last year, April 2015 sales were $438.2 billion, $5.9 billion less than March 2015.

Instead, the seasonal adjustments tell us that the monthly adjusted change for April 2016 was the highest since last March, which has led to the usual and predictable commentary euphoria.

Sales at U.S. retailers and restaurants grew at the fastest pace in more than a year last month, a sign consumers stepped up spending after a slow start to 2016.

Retail sales advanced 1.3% in April from the prior month to a seasonally adjusted $453.44 billion, the Commerce Department said Friday. It was the best monthly gain since March 2015.

“Recent claims of the demise of the U.S. consumer have been greatly exaggerated,” said Capital Economics economist Steve Murphy. Economists surveyed by The Wall Street Journal had expected April sales would be increase 0.8% from the prior month.

Again, the rest of the world is wondering what exactly these people are talking about. For starters, retail sales in April 2014 were only $1.4 billion less than March 2014, or almost an order of magnitude better than what we find in either 2015 or 2016. The seasonal adjustments are saying the difference is entirely due to the early holiday when there is more than enough to suspect something more than the calendar.

On an unadjusted basis, retail sales continue to move along below 3% or what counts as a demonstrable claim “of the demise of the US consumer.” Total retail trade, which does not count food sales, was up only 2.2% in April from April 2015, while excluding autos from the growth was just 1.92%.