Americans are in bad shape, but that hasn't discouraged their spending: overreacting to retailers, especially some retailers

Americans are in bad shape, but that hasn’t discouraged their spending: overreacting to retailers, especially some retailers

Retail therapy in bars, restaurants, cannabis stores and e-commerce? Other retailers are not so fortunate.

Written by Wolf Richter for WOLF STREET.

Retail sales jumped 0.9% in April compared to March, after jumping 1.4% in March compared to February, to reach $678 billion, and rose 8.2% from a year ago, seasonally adjusted, the Commerce Department said today. Retail sales are sales of goods only, not services. For months, we have seen a widespread shift in consumer spending from goods to services, as spending collapsed during the pandemic, but is now on the rise.

Today’s retail sales confirm this trend: despite spending shifting to services, consumers still spend huge amounts on goods, and growth in retail sales is somewhere near the rate of inflation, with “real” (inflation-adjusted) growth heading down, As spending on services, adjusted for inflation, is more than compensated for.

Consumers are in a bad mood, but they haven’t cut back on their spending.

Hyperinflation has outpaced the rate of income growth for many Americans, and they are also shifting spending to services. However, retail sales continued to rise, including e-commerce sales. What’s cool, in terms of shifts, is that there’s a huge boom happening in bars and restaurants, and in diversified stores, which notably include cannabis retailers – sales far outpacing inflation.

This increase in sales occurs even as consumer confidence in May fell to its lowest level in a decade, according to the University of Michigan Consumer Sentiment Survey. The general sentiment was offset by concerns about the hyperinflation that has spread across the economy and is hitting consumers in the face every day (data via the St. Louis Federal Reserve and University of Michigan Consumer Survey):

Retail therapy? It’s as if consumers are trying to overcome their sadness and anger over inflation with some traditional retail therapy to make them feel better — and they do so in bars, restaurants, and specialty stores that include cannabis stores and e-commerce. Other retailers are not so lucky.

Sales at dealers of new and used cars and spare parts, The largest retailer category, up 2.2% in April from March, to $132 billion, seasonally adjusted, but down 1.7% from a year ago. Used car prices are starting to drop on a monthly basis, although still much higher than they were a year ago, while new car prices have continued to rise at a record pace with new car dealers’ inventory tragically low. And dollar retail sales are the result of this mix:

Sales in e-commerce and “out-of-store retailers” It rose 2.1% seasonally adjusted in April from March, to $107 billion, and was up 12.7% year over year. This is the second largest retailer category and includes the e-commerce operations of classic retailers, such as Walmart:

Food and Beverage Stores: Sales were down 0.2% for the month to $77 billion, seasonally adjusted, but still up 7.1% year over year, supported entirely by price increases:

Food and drink services: Sales at these bars, restaurants, coffee shops, cafeterias, etc. jumped 2.0% for the seasonally adjusted month, to a record $84 billion, and by 19.8% year over year. This growth rate is approx three times CPI inflation rate for ‘food away from home’ (7.2%), which indicates that people are going to splurge, have fun and possibly quench their bad mood with the proper fluidity, spending huge amounts of money to do that he-she.

General merchandise stores: Sales were essentially flat for the month, at $57 billion, seasonally adjusted, up just 0.8% from the stimulus fueled in April of last year. Walmart and Costco fall into this category, but not supermarkets.

gas stations: Sales for the month fell 2.7% due to a drop in gasoline prices to $62 billion, seasonally adjusted. On an annual basis, sales were still up 36.9%, supported entirely by the yearly rise in gasoline prices.

Stores of building materials, garden supplies and equipment: Sales were nearly flat for the month, at $43 billion, for a 1.7% annual gain from Stimulus Miracle April:

Clothing and accessories stores: Sales rose 0.8% for the month, and 8.0% year over year to $26 billion, seasonally adjusted:

Miscellaneous retail stores (including cannabis stores): Sales rose 4.0% in the month to a record $15.9 billion (seasonally adjusted), and are up 19% from a year ago. This category tracks specialty stores, including cannabis stores that have become one of the hottest trends in brick-and-mortar retail as some of the black market business has gone above ground:

Shops: Sales rose 1.1% for the month to $11.5 billion, up 2.9% from a year ago. Price increases offset volume decreases. Compared to the peak in 2000, sales are down 42%, because this form of store has become unpopular with Americans, leading to thousands of store closings and numerous bankruptcies:

Furniture and home furnishing stores: Sales were up 0.7% for the month (seasonally adjusted), and at $12 billion, they were up just 0.8% year over year, despite price increases:

Sporting Goods, Hobbies, Books and Music: Sales fell 0.5% for the month, to $8.9 billion (seasonally adjusted), down 5.4% year over year:

Hardware and electronics stores: Sales rose 1.0% for the month, to $7.8 billion, seasonally adjusted, but fell 5.2% year over year. This segment covers sales only at specialty hardware and electronics stores, such as Best Buy or Apple Stores. Electronics and hardware is a big business that spreads across many types of retailers, such as general merchandise and e-commerce retailers, and sales of electronics and electronics at these retailers are listed in their segments (above).

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2022-05-18 04:50:25

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