January retail sales slipped almost 1%, but views differ on what it means
January retail sales slipped almost 1%, but views differ on what it means
On Friday, the Census Bureau gave us retail sales data for January, which fell 0.9% from December. That’s a much bigger drop than economists were expecting.
Now, we usually see a drop in retail sales at the start of the year as people and their bank accounts try to recover from their holiday spending sprees.
With those swings, plus the snowstorms and fires that have hit the country, a number that indicates how much people are shopping doesn’t necessarily indicate how much people want to be shopping.
Tracking retail sales is a way to measure consumer demand in this economy. But the overall tally, almost $724 billion in January, can obscure a lot of nuance.
“If what you’re trying to look at is some measure of consumer confidence, then you don’t want the number that you’re looking at to be driven by whether or not the harvest for avocados was good,” said Erica Groshen, former commissioner of the Bureau of Labor Statistics and a current senior economic adviser at Cornell.
So there are a few different breakdowns of the data in the census report. Isolating a control group, sometimes called “core retail sales,” strips out more volatile categories like automobiles, gasoline and building materials.
Plus, different groups and companies have their own versions of “core retail sales” depending on their view of the economy, said Brian McCarthy, retail strategy lead at Deloitte.
“So you can see one core group being your typical grocery, soft goods, hard goods, and then another group being your grocery, soft goods, hard goods, including gas and restaurants,” said McCarthy.
Changing those inputs can make a big difference in the headline number. For example, in January’s report, said Bea Chiem, a managing director at S&P Global Ratings, “if you stripped out, you know, autos, the decline was actually a little bit less to the overall retail sales number. So that was down 0.4% versus down 0.9% with everything in.”
Same data, same economy, just a slightly different view.
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