Money-printing hits home. Charts by retailer category.
By Wolf Richter for WOLF STREET:
Total retail sales jumped by 1.7% in October from September, by 16.3% from October a year ago, and by 22% from October 2019, to a record $638 billion (seasonally adjusted), according to the Census Bureau today, blowing by the mind-blowing free-money-blow-off-spike in March and April, driven by equally mind-blowing inflation:
Fired up by $4.5 trillion in Federal Reserve money printing and by $5.7 trillion in federal government deficit spending since March 2020, over $10 trillion in total monetary and fiscal stimulus in just 20 months, including hundreds of billions of dollars in free money handed directly to states, businesses, and consumers, and trillions of dollars handed to the markets, leading to a monstrously overstimulated economy and to even more monstrously overstimulated markets, well – you guessed it but the Fed refuses to guess it – demand for goods of all kinds has spiked in a historic manner, as you can see in the charts below.
No supply chain or transportation system was, or could ever be, ready for this artificially stimulated historic spike in demand, triggering widespread shortages, along with a sudden and radical change in the inflationary mindset of consumers and businesses, and massive price increases that keep rippling through the economy and are now intensifying further up in the pricing pipeline, where price spikes have reached 20%, and they’re getting passed on.
These mind-blowing price increases are inflating retail sales. Four retailer categories account for 52% of total retail sales here: auto dealers, food & beverage stores, restaurants, and gas stations. And prices there have surged, as tracked by the Consumer Price Index, compared to a year ago:
- Used vehicle prices: +26%
- New vehicle prices: +10%
- Food prices at stores: +5.4%
- Restaurant Prices: +5.3%
- Gasoline prices: +50%
For your amusement, miscellaneous store retailers first, where sales are spiking in the most peculiar manner. These are specialty stores such as beer brewing supply stores, telescope stores, arts supply stores, etc. Sales are spiking because those retailers also include cannabis stores, and that trade, once hidden, has come to the corner store, and is being counted and taxed.
Sales in October spiked 2.8% from September, by 26% year-over-year and by 30% from October 2019, to $15 billion (seasonally adjusted):
Magnitude by retailer categories. In the overall scheme, these miscellaneous store retailers with the booming cannabis trade are small fry, the green line at the bottom in the chart below. Auto dealers and parts stores are by far the largest retail segment (black line). Nonstore retailers – mostly ecommerce – have become the second largest retail category (red line), followed by grocery & beverage stores (green), restaurants and bars (purple), general merchandise stores (yellow), building material and garden supply stores (gray), and all the rest:
New & used auto dealers and parts stores: Sales rose 1.8% in October from September, to $127 billion (seasonally adjusted), the second month in a row of increases, after months of large declines from the free-money-blow-off spike in March and April. This was still up 11% from a year ago and 22% from two years ago:
Massive price increases and a shift to higher-end models covered up the plunge in unit sales. The above sales are measured in dollars. Auto dealers, the largest category in retail, move the needle.
The average transaction price per new vehicle sold in October soared to $44,000, up 19% in just nine months, a result of higher prices and of the shift to higher-end models, as auto dealers and automakers are making record per-unit gross profits:
But the number of new vehicles delivered has plunged in recent months to the lowest Seasonally Adjusted Annual Rate (SAAR) since 2011 because dealers have run out of inventory to sell, as automakers are running out of certain types of semiconductors and cannot produce enough vehicles, and are now prioritizing their higher-end models:
Retail prices of used vehicles are following wholesale prices with a lag of a month or two. The CPI for used cars and trucks, up 26% year-over-year, is now getting ready to re-spike in line with wholesale prices in the prior two months:
The inflationary mindset has radically changed. Price spikes like these would normally have entailed a collapse in demand, which would have prevented prices to spike like this in the first place.
Vehicles are the ultimate discretionary product. Most potential buyers can easily wait a year or two and drive what they already have. And they did this during the Great Recession. But now they’re jostling for position to pay over sticker for new vehicles and to pay ridiculous prices for used vehicles.
This radical change in the inflationary mindset that allows for higher prices to get passed on and persist is why I’ve been throwing shade all year since January on assertions that this inflation is temporary.
Ecommerce and other “nonstore retailers”: Sales spiked by 4.0% for the month, to a record $92 billion, up 10.2% from a year ago, and up 34% from September 2019. They include online-only retailers and the online sales of brick-and-mortar retailers, as well as sales by mail-order houses, street stalls, vending machines, etc.
Food and Beverage Stores: sales rose 1.1% for the month, to $77 billion, up 8.3% year-over-year and 20% from October 2019, powered by surging prices:
Restaurants & Bars: Sales were flat for the month at a record $72.4 billion, up 29% from a year ago, and up 11% from two years ago, as the CPI for food away from home jumped by 0.8% for the month and by 5.3% year-over-year, with restaurants passing on surging labor and materials costs:
General merchandise stores: Sales rose 0.8% for the month to $60 billion, matching the free-money-blow-off record in March 2021. They were up 13.7% year-over-year and 23% from two years ago. These stores include the brick-and-mortar stores of Walmart and Costco:
Gas stations: Sales jumped 3.9% for the month, 47% year-over-year, and 28% from two years ago, to a record $54 billion, powered by gasoline prices that spiked 50% year-over-year, according to the CPI for gasoline. Sales at gas stations include sodas, junk food, beer, motor oil, etc.:
Building materials, garden supply and equipment stores: Sales rose 2.8% for the month, 10.2% year-over-year, and 26% from two years ago, to $40 billion, still down from the DIY-spike in March:
Clothing and accessory stores: Sales declined 0.7% for the month, to $26 billion, up 26% year-over-year, and up 18% from two years ago:
Department stores: sales rose 2.2% for the month, 28% year-over-year and 15% from two years ago, to $12.8 billion, which is still way below the levels of 1992, not adjusted for inflation:
Furniture and home furnishing stores: Sales inched up 0.4% for the month, 12% year-over-year, and 23% over two years, to $12.2 billion:
Sporting goods, hobby, book and music stores: Sales jumped 1.5% for the month, 18% year-over-year, and 40% from two years ago, to $9.4 billion:
Electronics and appliance stores: Sales jumped 3.8% for the month, 18% year-over-year, and 4.3% from two years ago, to $8.4 billion. This smallest retailer category here covers only the brick-and-mortar stores of electronics and appliance retailers, such as Best Buy. Electronics and appliances are a big industry, but sales mostly take place online and at other brick-and-mortar retailer categories, such as general merchandise stores and home improvement stores:
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