, Despite May’s Weak Retail Showing, The Post-Pandemic Recovery Remains On Track, The Nzuchi News Forbes

Despite May’s Weak Retail Showing, The Post-Pandemic Recovery Remains On Track

, Despite May’s Weak Retail Showing, The Post-Pandemic Recovery Remains On Track, The Nzuchi News Forbes

Though retail sales sank from April to May, the post-pandemic consumer recovery still looks strong and sustainable. Often these monthly figures, as they emerge from the Commerce Department’s Census Bureau, give misleading signals. They exaggerate strength one month or weakness the next. The important thing is to ignore a single data point and concentrate on the trend over several months. There may be reason to worry over the economy’s long-term growth prospects, as outlined in this post, but over the period immediately ahead and into 2023, the picture of recovery looks good.

By itself, the retail sales report for May might give pause. The Census Bureau recorded a 1.3% drop in all retail and food service sales for the month. That constitutes a 30.6% annual rate of decline and alone is more reminiscent of the worst of last spring’s pandemic problems than of recovery. It reflects a 3.7% monthly drop in sales of motor vehicles and parts and a 5.9% monthly drop in the sales of retail building materials and garden equipment. It also includes a 2.1% drop in furniture sales and a 3.4% drop in sales of electronics and household appliances. These declines clearly overwhelmed a powerful 3.0% monthly advance in clothing sales and a 1.8% rise in sales of health and personal products.

What is crucial  to any interpretation of the underlying retail sales picture is that these May declines come on the heels of unsustainably strong advances in March and April. Those two months saw a 6.1% monthly rate of increase in overall retail and food sales – 104% at an annualized rate and hardly something that one would expect the figures could build on. Sales of autos and parts, a big disappointment in the May report, rose at an even stronger 10.6% monthly rate in March and April. Furniture sales, also down big in May, rose at a 4.5% monthly rate in the prior two months, when building materials and garden equipment, also a weak spot in May, registered a 5.9% monthly rate of advance.

, Despite May’s Weak Retail Showing, The Post-Pandemic Recovery Remains On Track, The Nzuchi News Forbes

Clearly, all the May decline did was average the trend into a growth pattern that remains strong but is more reasonable and sustainable. One would think that the millions or household purchases would themselves average out month to month so that each month’s report would reflect the underlying trend, but that is not the picture typically produced by these monthly releases.  Instead, they follow what can only be described as a lumpy pattern in which sharp moves one month average against moves in the opposite direction the month  before only to reveal an underlying trend after averaging. On this basis, the monthly pace of the March-May period shows a 10.9% rate of advance for all retail and food sales, following a 5% monthly rate of advance in the November-January period. Even these rates are too powerful to sustain and beg some further correction either in the Bureau’s annual revisions or in weaker sales reports in future months.  

Some might still want to dwell on the most recent, and in this case also weak sales figures. That might be reasonable, despite the rather lumpy nature of these monthly statistics, except that the strength of employment gains and wage increases offer still more reason to expect powerfully positive retail sales.  The Labor Department reports that employment nationally increased by some 11 million over the last year, an almost 9% increase in the employed workforce. At the same time, it reveals that weekly wages have risen 2.6%.   These positive developments, plus the largess pouring out of Washington, have increased household income at a 15.1% annual rate over the five months ended in April, the most recent month for which such data exist. This background offers every reason to expect a continued powerful expansion in retail sales, albeit averaging at a more sustainable rate than presented in the March-May period.


More Stories
Proud To Be Us: Celebrating Pride Month With Supernow