Americans are not in the mood for a recession: splurging on goods, flocking to restaurants

But inflation is eating everyone’s lunch.

By Wolf Richter for WOLF STREET.

Retail sales in June jumped 1.0% from May, 8.4% from a year ago and 32.5% from June 2019, to $681 billion, seasonally adjusted, the Census Bureau reported today.

Retail sales are sales of goods. Sales of services, such as insurance, health care, airline tickets, etc., are not included in retail sales. Ticket sales at the mall multiplex are not included in retail sales, but are services, and consumers have shifted some spending to services. And yet, consumers still splurged on goods. These people are tough when it comes to shopping. Nothing seems able to reverse them, not even galloping inflation.

Inflation is raging in services, food, gasoline; down in durable goods.

Inflation affects the economy. Where prices are currently climbing are services – but they are not included in retail sales.

And prices are skyrocketing for non-durable goods, dominated by food, gasoline and supplies. These consumables are sold in various categories of retailers, such as grocery stores, gas stations, general merchandise stores that sell food, supplies and gasoline, in certain “miscellaneous stores”, such as cannabis stores. But wait…cannabis products are not in the CPI basket.

But in durable goods, the crazy inflation of almost 19% at the beginning of this year decreased and in June to 8.4%. Retailers in these categories are stores that sell motor vehicles, auto parts, appliances, tools, electronics, furniture, etc.

Sales by retailer category, not adjusted for inflation.

Sales at dealerships of new and used vehicles and parts, the largest retail sales category, rose 0.8% in June from May, to $128 billion, seasonally adjusted, and remained unchanged from a year ago, but in up 24% from June 2019, amid huge price increases in 2021 that are now stabilizing. There was a lot of supply of used vehicles. But many new-vehicle dealers were still critically short of inventory, and consumers who want to buy a vehicle must order it and wait months.

But unit sales are down from a year ago for both new and used vehicles. The number of new vehicles delivered to end users in June fell 13.5% from the June 2021 beat, to 1.13 million vehicles, and 25% from June 2019.

The number of used vehicles delivered to retail customers in June fell 13% year over year, according to Cox Automotive, as consumers begin to rebel against the year’s ridiculous price spike last, and these price spikes hit buyer resistance.

E-commerce sales and other “non-store retailers” the second-largest retail sales category, jumped 2.2% in June from May to a record $105 billion, and rose 9.6% year-over-year and up 68% from June 2019. This includes e-commerce operations from brick-and-mortar retailers, as well as sales at stalls and markets. The e-commerce boom continues:

Food and Beverage Stores: Sales rose 0.4% for the month and 7.1% year over year to $78 billion. Compared to June 2019, sales increased by 23%:

Food services and drinking places: Sales from bars, restaurants, cafes, cafeterias, etc. jumped 1.0% for the month and 13.4% year-over-year to a record $86 billion. They are booming, with sales up 33% from June 2019. Note that the year-over-year sales increase of 13.4% far exceeds the CPI for “food away from home” (7.7%). Americans are coming out in force and flocking to restaurants.

General Merchandise Stores: Sales were up 0.3% for the month and 2.4% from last year’s stimulus miracle of $57 billion. Walmart and Costco are in this category, but not major stores. Compared to June 2019, sales are up 18%:

Service stations: Sales jumped 3.6% for the month and 49% year-over-year to $70 billion, due to soaring gasoline prices, although actual consumption, measured in volume, has fallen as consumers respond with changes in their driving patterns to reduce fuel consumption and limit their gasoline expenditures.

Actual gasoline consumption, in barrels per day, hadn’t gone anywhere since 2007. And now the price spikes have sparked a buyers’ strike. In the week to July 8, gasoline consumption fell to 8.73 million barrels per day (four-week rolling average), according to EIA data, a level seen for the first time in July 1999.

Stores of building materials, supplies and garden equipment: Sales fell 0.9% for the month to $42 billion, but were still up 6.4% from last year’s stimulus miracle:

Clothing and accessories stores: Sales fell 0.4% for the month and were flat year over year. At $26 billion, they were still up 16% from June 2019:

Miscellaneous in-store retailers (including cannabis stores): Sales jumped 1.4% for the month and 15.1% year over year to $15.7 billion. Compared to June 2019, sales increased by 43%! This category includes specialty stores, such as art supply stores, brewing supply stores, and cannabis stores – now the hottest category in brick-and-mortar retail:

Furniture and home furnishings stores: Sales increased 1.4% for the month and 4.6% year over year to $12 billion, and were up 22% from June 2019:

Department stores: sales fell 2.6% for the month and 2.9% year-over-year to $11 billion. Compared to the peak of the year 2000, sales have fallen by 44%, after the liquidation of many department store chains in bankruptcy courts and the closure of thousands of stores, and the surviving department store chains are still closing stores.

This graph, which dates back to 1992, shows the slow and methodical disappearance of what was once the epitome of shopping for Americans:

Sporting goods, hobby, book and music stores: Sales increased 0.8% for the month and 2.7% year over year to $9.2 billion, up 35% from June 2019:

Electronics and appliance stores: Sales rose 0.4% for the month, but were down 9.1% from the stimulus miracle a year ago. At $7.7 billion, sales were up slightly from June 2019.

This segment covers only specialty electronics and appliance stores, such as Best Buy or Apple stores, and none of the other stores, such as Walmart, and e-commerce sites, where the vast majority of these products are sold.

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About Andrew Estofan

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