US consumer spending rose in August as gas prices fell

[BumRushDaShow]

Source: CNN Business

CNN Business — Another month of falling gas prices gave Americans’ wallets a bit of a reprieve in August. That sent consumers back to stores last month. The Census Bureau reported Thursday that a key measure of August US retail sales rose unexpectedly by 0.3% on a monthly basis, following a revised decrease of 0.4% in July. Retail sales, which are not adjusted for inflation, were up by 9.1% from a year ago.

The continued decline in gas prices was reflected by a 4.2% drop for the month on spending at gas stations. Backing out this volatile component, sales rose by 0.8% for the month. Persistently high food inflation showed up in a 0.2% increase in spending at grocery stores on a month-over-month basis.

The strong reading, indicating a resilient consumer, is likely to give more ammunition to the Federal Reserve, which has been raising interest rates in a bid to tamp down the highest inflation in 40 years. Consumer prices in August rose by 8.3% over the past year, the Bureau of Labor Statistics reported Tuesday.

Of the 13 categories of retail spending tracked by the Census Bureau, eight rose in August. Spending at food and beverage retailers was up 0.5% for the month and has risen by 7.2% over the past year. Sales increased at restaurants and bars, and car dealerships jumped by 2.8% on the month. Spending on building materials and equipment, clothing and sporting goods also rose.

Read more: https://www.cnn.com/2022/09/15/economy/august-retail-sales-consumer-spending/index.html

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There was an "expectation" that retail sales would fall in August.

[tecelote]

1. No doubt...

The less consumers spend on gas, the more money they can spend on other things boosting the economy across the board.

[ProfessorGAC]

8. Yes

This report can be filed under "Well, duh!"

[PatrickforB]

2. This data, which comes from the US Census, is a bit misleading in times of inflation.

I reviewed the latest inflation numbers from BLS and while gas prices are significantly down, the price of healthcare services, health insurance and food at the grocery store kept spending high.

Let me explain what I mean by 'misleading.' The way the data is reported implies that decreases in gas prices led to greater consumer spending (implying more consumer confidence). However, the truth is that since the data reported is gross expenditures, we must remember that other prices remain very high. For instance, food at home (groceries) rose 7/10 of a percent from last month, and was up 13.5% from one year ago. To drill down a bit, dairy products were also up 7/10 of a percent from last month, and 16.2% from a year ago.

So, when spending remains high, with inflation still generally high, people have to spend more just to get the same amount of product or service they were getting. It isn't about consumer confidence, it is about inflation driving higher consumer spending because consumers have no choice. You've got to buy groceries, right?

Corporate profit gouging has much more to do with inflation, too, than so-called 'salary inflation,' as many in the corporate owned media report. Salaries have risen, it is true, but in many cases, particularly in occupations with low to mid level wages, have not kept up with inflation. Ah, but let's look at a very specific profit gouge:

The general cost of medical care services is up 5.6% from last year, but the cost of health insurance is up 24.3%. Basically, health insurance companies are gouging both employer and individual customers far more than the rising cost of the actual health care services would seem to warrant. I have a colleague who maintains that these companies are simply 'making up' for profits they lost during the pandemic, but a percent differential of 18.7% is just plain price gouging.

So there you have it.

[progree]

3. From the Source (some very user-unfriendly links). And inflation-adjusted numbers

(yes, they are seasonally adjusted too. No, they are not adjusted for inflation)

https://www.census.gov/retail/index.html
https://www.census.gov/economic-indicators/#retail_sales
Press Release: https://www.census.gov/retail/marts/www/marts_current.pdf

To me, on a month over month basis,

in August retail sales were up +0.3% while the CPI was up +0.1%, so we had an inflation-adjusted +0.2% increase in retail sales.

in July retail sales were up -0.4% (yes, that's down) while the CPI was up +0.0%, so we had an inflation-adjusted -0.4% increase in retail sales (yes that's a decrease).

Add the 2 months together, and its retail sales -0.1% and CPI:+0.1%, for an inflation-adjusted -0.2% increase in retail sales (yes that's a decrease)

As for 12 months numbers: retail sales were up +9.1%, while CPI was up 8.2%, for an inflation-adjusted +0.8% increase in retail sales.

(9.1% - 8.2% is 0.9%, but really it's 1.091/1.082 = 1.0083. Subtract 1 and multiply by 100%: 0.83%)

As for components, blah blah blah. But yes, inflation is still hot in pretty much everything except energy and a handful of other things. But not as hot as before.

CPI data series: http://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth

CPI report (click on the tables at the bottom to see more components)
http://www.bls.gov/news.release/cpi.nr0.htm

[BumRushDaShow]

4. Thank you

Was considering looking for the source stuff but the breaking news has been fast and furious, literally since about 5:30 this morning ET, and hasn't let up.

Link to tweet

U.S. Census Bureau
@uscensusbureau
·
Follow
Retail & food services seasonally adjusted sales were $683.3b in August 2022, up 0.3% from July 2022, and up 9.1% from August 2021. http://census.gov/retail #CensusEconData #RetailSales
Image
8:39 AM · Sep 15, 2022

That visualization is kinda cool!

[progree]

5. Yes, it's quite an eye-opener

That visualization is kinda cool!

[BumRushDaShow]

6. Took me a couple minutes to realize that was a biannual plot over 10 years

I suppose one could attribute the slope of that curve to "inflation" and/or people just "buying more stuff" over the past 10 years!

The pandemic shock is clearly visible though.

[progree]

7. Yes, it would be very interesting to see an inflation-adjusted per capita version

OTOH, the GDP is inflation-adjusted (one can dig for the non-adjusted numbers, but what the media reports and the Commerce Dept reports in their news release is inflation-adjusted using their GDP Deflator), so anyway, on a long-run average basis, the GDP is probably a very good proxy for inflation-adjusted retail sales. Plus the GDP report has the retail sales chunk of it available too for the looking if one wishes to probe.

Oh, a logarithmic scale would be nice too

S&P 500 down 1.1% today, and down 18.7% from its Jan 3 all-time high. Nearing the "bear line" once again