Spiking prices inflate retail sales across the board, but particularly at auto dealers and gas stations.
By Wolf Richter for WOLF STREET.
Retail sales in November, including at restaurants and bars, hit a new record of $640 billion seasonally adjusted annual rate, and a record of $649 billion not-seasonally adjusted annual rate, up by 19.5% from November last year, and up by 22% from November two years ago, according to the Census Bureau today, as raging inflation inflated retail sales.
But compared to the blowout October, sales ticked up 0.3%, seasonally adjusted, as department stores, after a year-long post-lockdown get-out-of-the-house honeymoon, reverted to brick-and-mortar meltdown. Vehicle dealers, with little inventory to sell, countered plunging unit sales by massively jacking up prices. And ecommerce sales, not seasonally adjusted, spiked 20% from October, to a record, but seasonal adjustments got rid of that gain entirely.
These are sales of goods at brick-and-mortar locations and online. Services, such as insurance, healthcare services, housing costs, or haircuts, are not included.
Retail sales have been goosed by $4.5 trillion in money-printing in 21 months, and by interest rate repression despite raging inflation, that caused asset prices to spike, and caused people to spend this manna from heaven no matter what the price. And some of the $5 trillion in government-spending of borrowed money was channeled to people who then also spent it no matter what the price.
Hence the spike in retail sales since June 2020, and the worst inflation in 40 years, with even more inflation building up further in the price pipeline.
Retail sales are not adjusted for inflation, and often huge price increases are inflating them. Four retailer categories account for 52% of total retail sales: New and used vehicle and parts dealers, food & beverage stores, restaurants, and gas stations.
And prices at those retailers have skyrocketed, according to the Consumer Price Index, November compared to a year ago:
- Gasoline prices: +58.1%
- Used vehicle prices: +31.4%
- New vehicle prices: +11.1%
- Food prices at stores: +6.1%
- Restaurant Prices: +5.8%
Magnitude by retailer categories. Auto dealers and parts stores are by far the largest retail segment (black line). Nonstore retailers – mostly ecommerce – have surged to second place (red line), followed by grocery & beverage stores (green), restaurants and bars (purple), general merchandise stores (yellow), building material and garden supply stores (gray), and then the small fry, such as department stores at the very bottom:
New & used auto dealers and parts stores: Sales were flat with October, at $126.5 billion (seasonally adjusted), stuck for months after they ran out of inventory following the free-money-blow-off spike in March and April. But sales were still up 12.7% from November 2020 and by 19% from November 2019. As unit sales have plunged amid vehicle shortages, these dollar sales were accomplished by rampant price increases and a shift to loaded and high-end models:
The number of new vehicles delivered to end users plunged this year – in November, to a seasonally adjusted annual rate of 12.86 million vehicles, down 25% from November 2019 – as dealers are short on inventory, while automakers, still bogged down in semiconductor shortages, are prioritizing loaded and high-end models to maximize their revenues:
Huge price increases and a shift to high-end models caused the average transaction price (ATP) for new vehicles sold in November to spike by 18% year-over-year to a record $44,043 per vehicle, according to J.D. Power estimates, as auto dealers and automakers are raking in record per-unit gross profits:
The number of used vehicles sold at dealers in November was roughly flat with October and year-over-year, at a seasonally adjusted annual rate of 20.4 million units, as prices have completely blown out, with retail prices up 31.4% year-over-year, according to CPI:
Ecommerce and other “nonstore retailers”: Sales spiked 20% not-seasonally adjusted for the month to a record $105.3 billion, surpassing December 2020 even though Decembers are always the peak months, and were up 15% from a year ago, and 41% from two years ago. But the seasonal adjustments were huge for November, and chopped seasonally adjusted sales down to $92.2 billion, still a record.
These nonstore sales 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.
This chart shows the not-seasonally-adjusted spike in November (red) and what seasonal adjustments have done to it (green):
Food and Beverage Stores: sales jumped 1.3% for the month, to $78 billion (seasonally adjusted), by 8.6% year-over-year, and by 22% over two years, fueled by surging prices:
Food services and drinking places: Sales jumped 1% for the month at a record $74 billion (seasonally adjusted), up 15% from November 2019, amid the biggest price increases in 40 years:
General merchandise stores: Sales ticked down 0.3% for the month to $59 billion, down just a tad from the free-money-blow-off record in March 2021, but up 12.3% year-over-year and up 21% over two years. These stores include the brick-and-mortar stores of Walmart and Costco, but do not include department stores.
Gas stations: Sales jumped 1.7% for the month, 52% year-over-year, and 30% over two years, to a record $55 billion, powered by gasoline prices that spiked 58% in November year-over-year. Sales at gas stations include all the other stuff people buy there, such as sodas, snacks, and motor oil:
Building materials, garden supply and equipment stores: Sales rose 0.7% for the month, 9.3% year-over-year, and 26% over two years, to $40.6 billion. But the sudden stimulus-fueled DIY-spike in March is now a distant memory:
Clothing and accessory stores: Sales rose 0.5% for the month, to $26.5 billion, matching the record of June 2021, up 26% year-over-year, and up 18% from two years ago:
Miscellaneous store retailers, including cannabis retailers: Sales ticked down 0.3% in November, after a huge blowout spike in the prior five months, to $14.9 billion, up 24% from a year ago and up 28% from two years ago. In addition to cannabis retailers, this category includes other specialty stores, such as beer brewing supply stores, telescope stores, arts supply stores, etc.
Department stores: sales plunged 5.4% for the month, to $11.7 billion, the lowest in six months, but were still up 5.9% from two years ago. After months of being stuck at home, people had flocked back to department stores after the lockdowns, and for a while it looked like department stores would make some sort of come-back, but now that appears to have ended. Sales are down 41% from the peak in the year 2000:
Furniture and home furnishing stores: Sales were flat for the month, at $12.5 billion, but up 16% year-over-year, and 25% over two years:
Sporting goods, hobby, book and music stores: Sales rose 1.3% for the month, 20% year-over-year, and 45% over two years, to $9.5 billion:
Electronics and appliance stores: Sales plunged 4.6% for the month to $8.0 billion, but were still up 17% year-over-year, and down a tad from two years ago. This category covers only the brick-and-mortar stores of specialty 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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