April Retail Sales

Retail sales improved in April according to the Census Bureau.  The uptick of 0.1 percent did not, however, make up for March’s loss of -0.5 percent, which was downwardly revised from the initial tally of -0.4 percent.  When Atlas compares month-over-month changes in essentials like grocery store sales to some of the other components making up this report, we find the areas of strength may be pointing to a split in the wellbeing of American households.

A few encouraging categories in this report improved for the month.  Auto dealers enjoyed a one percent uptick over March figures.  The average age of America’s car fleet is getting long in the tooth, but it still takes some optimism to commit to a monthly payment.  Electronics and appliance stores tacked on 0.8 percent growth in the period.  The building material and gardening equipment category managed a 1.5 percent improvement for the month.  Food services and drinking places rose 0.8 percent.  The reading here is that a growing number Americans are feeling good enough to spend money on food prepared outside of their own kitchen.  This particular data point often leads many of the other subcomponents.  Some of the spare cash to spend eating out may have come from the savings in gasoline.  Petrol stations saw sales fall 4.7 percent for the month.  Most of this is likely caused by falling prices in April. 

The curious parts of the release are the sales being reported by food and beverage stores as well as health and personal care stores.  The former, an essential category, fell 0.8 percent.  This may be pointing either to falling food prices or possibly weaker demand as consumers try to stretch their income.  While the overall trend in prices for food has been higher over the last year, it did show a dip in March’s consumer price index.  Also, sales at health and personal care stores fell again, perhaps caused by household budget strains.

The bifurcation in the direction of the components mentioned in our opening paragraph may speak to a societal split in America’s improving economy.  It is as if one cohort is increasing their consumption of durable goods and eating away from home (these areas of the economy tend to go up when income grows) while another group is spending less on nondiscretionary items like groceries.  Why this split appears to be happening remains to be seen.  Are lower income, underemployed, and unemployed folks changing the mix in their shopping carts or does this reflect something even more serious?  Atlas will look for additional hints of this in future releases of retail sales and measures of inflation.    (by Christopher)