“Not seasonally adjusted” sales plunged from the big record in December, but not as much as in pre-pandemic Januaries.
By Wolf Richter for WOLF STREET.
Despite all the rate hikes, consumers are still flush with money, they have jobs, and if they lose their job, they can quickly get a new job, and their pay has gone up, and the price of gasoline has plunged from the peak in 2022, prices of some other big-ticket goods have come down, and so there’s extra money to spend on other stuff and in restaurants. And that’s what “retail sales” are tracking: the sale of goods from the retailers’ point of view, reported today by the Census Bureau. They’ve been strong despite a big shift in spending from goods back to services.
Inflation has shifted from goods to services. While inflation is now raging in services at the highest rate in four decades, inflation in durable goods, such as motor vehicles, furniture, and electronics, has turned negative year-over-year (-1.3%), unwinding some of the crazy price spikes that started in 2020. So for most retailers, price increases are now tough to make stick, and they no longer play the big role in retail sales that they did a year ago.
Today’s sales report was a shocker on the surface: +3.0% in January from December, seasonally adjusted. But beneath the surface, it wasn’t a shocker; it showed three things we’ve discussed here a lot:
- Consumers are simply in no mood for landing this thing.
- Seasonal adjustments made December retail sales seem worse than they were: “Not seasonally adjusted, and despite the price drops, total retail sales and ecommerce sales hit records,” I wrote at the time.
- And seasonal adjustment made January sales seem better than they were. But sales were strong for a January.
Retail sales always collapse in January from December, the peak shopping month of the year. Januaries are made worse for retailers by merchandise being returned that had been bought in December (negative sales in January). This plunge in retail sales from December to January is why most retailers end their fourth quarter at the end of January in order to get the horrible month into the same quarter as the top two months of the year.
Seasonal adjustments are used to iron out those differences between December and January so that January can be compared to December: So for retail sales, we got:
- Seasonally adjusted: +3.0% in January from December, to $697 billion.
- Not seasonally adjusted: -16.2% in January from December to $627 billion. But that plunge was smaller than typical plunges during this time.
Here are the pre-pandemic January plunges not seasonally adjusted – all much bigger than the 16.2% plunge in January 2023:
- January 2020: -18.2%
- January 2019: -18.4%
- January 2018: -20.6%
- January 2017: -21.9%
This list shows that the seasonal plunge from December to January has been diminishing over the years. On top of that came the distortions during the pandemic. This makes it much more difficult in estimating what part of the month-to-month change in sales was just for seasonal reasons, to be ironed out by seasonal adjustments, and what part were for business or economic reasons, to be displayed in all their glory.
Seasonal adjustments are based on typical prior seasonal changes. So these seasonal adjustments reduced December sales by too much and increased January sales by too much.
Not seasonally adjusted, and compared to the same month a year earlier, retail sales in January jumped by 6.7%, after having jumped by 5.1% in December. In other words: December 2022 was pretty strong compared to December 2021, and set a massive record of $748 billion, and January 2023 was even stronger compared to January 2022, though month-to-month sales fell 16.2%:
Retail sales by category, seasonally adjusted, to avoid headaches & whiplash.
New and Used Vehicle and Parts Dealers (nearly 20% of total retail):
- Sales: $132 billion, seasonally adjusted
- Month over month: +5.9%
- Year-over-year: +2.8%%
- From January 2019: +32%
- CPI used vehicles: -1.9% for the month, -11.6% year-over-year
- CPI new vehicles: +0.2% for the month, +5.8% year-over-year.
Ecommerce and other “nonstore retailers”: Sales at ecommerce retailers, at ecommerce operations of brick-and-mortar retailers, and at stalls and markets:
- Sales: $110 billion, seasonally adjusted
- Month over month: +1.3%
- Year-over-year: +3.0%
- From January 2019: +86%
Food services and drinking places:
- Sales: $95 billion, seasonally adjusted
- Month over month: +7.2%
- Year-over-year: +25.2%
- From January 2019: +55%
- CPI for “food away from home”: +0.6% for the month, +8.2% year over year:
Food and Beverage Stores:
- Sales: $81 billion, seasonally adjusted
- Month over month: +0.1%
- Year-over-year: +6.2%
- From January 2019: +28%
- CPI for “food at home”: +0.4% for the month, +11.3% year over year:
- Sales: $60 billion, seasonally adjusted
- Month over month: 0%
- Year-over-year: +5.7%
- From January 2019: +49%
- CPI for gasoline: +2.4% for the month; +1.5% year over year:
This chart shows the relationship between the CPI for gasoline (green, right axis, just gasoline, not the other stuff gas stations are selling) and sales in billions of dollars at gas stations, including all the other stuff they sell (red, left axis):
General merchandise stores, without department stores:
- Sales: $60 billion, seasonally adjusted
- Month over month: +0.7%
- Year-over-year: +4.3%
- From January 2019: +24%
Building materials, garden supply and equipment stores:
- Sales: $43 billion, seasonally adjusted
- Month over month: +0.3%
- Year-over-year: +1.1%
- From January 2019: +33%
Clothing and accessory stores:
- Sales: $27 billion, seasonally adjusted
- Month over month: +2.5%
- Year-over-year: +6.3%
- From January 2019: +21%
Miscellaneous store retailers (includes cannabis stores): These are specialty stores, from art-supply stores to wine-making supply stores, including cannabis stores, which are the big driver in this category as cannabis production and sales have become legal in many states in recent years, and legal sales have taken off.
But cannabis prices have plunged 19% year-over-year, per Cannabis Benchmarks U.S. Spot Index as of February 10, with booming supply grown in the US overwhelming even strong demand. This plunge in price put a damper on the boom in sales as measured in dollars:
- Sales: $16 billion, seasonally adjusted
- Month over month: +2.8%.
- Year-over-year: +6.7%
- From January 2019: +52%
Furniture and home furnishing stores:
- Sales: $12 billion, seasonally adjusted
- Month over month: +4.4%
- Year-over-year: +3.8%
- From January 2019: +24%
Department stores, seasonally adjusted & not seasonally adjusted. From January 2001 through January 2023, and despite 22 years of inflation, sales have dropped by 54% as consumers increasingly bought this stuff online, including at the ecommerce sites of the few surviving department store chains. For example, Macy’s ecommerce sales are included in ecommerce sales, but not here in department store sales.
Sales at department stores collapse every January by more than at any other retailer category. So here are both:
- Sales: $12 billion, seasonally adjusted; $9 billion not seasonally adjusted.
- Month over month: +17% seasonally adjusted; -47% not seasonally adjusted
- Year-over-year: +5.4% seasonally adjusted; +3.1% not seasonally adjusted.
- From January 2019: +4.7%
- From January 2001: -54%
But this 47% collapse in January from December was less than the month-to-month collapse in January 2020 (-54%), in January 2019 (-54.6%), in January 2018 (55.3%), etc. So compared to prior Januaries, this year’s collapse wasn’t as bad, and therefore, on a seasonally adjusted basis, sales jumped.
Just for a dose of whiplash, here are seasonally adjusted sales (green line) and not seasonally adjusted sales (red spike-and-collapse pattern):
Sporting goods, hobby, book and music stores:
- Sales: $9.4 billion, seasonally adjusted
- Month over month: +0.2%
- Year-over-year: +6.9%
- From January 2019: +45%
Electronics and appliance stores: Sales at specialty electronics and appliance stores, such as Best Buy’s brick-and-mortar stores or Apple’s brick-and-mortar stores. Not included are the electronics and appliance sales at ecommerce operations, at other brick-and-mortar retailers that are in a different category, such as Walmart, Costco, or Home Depot.
- Sales: $7.0 billion, seasonally adjusted
- Month over month: 3.5%
- Year over year: -6.3%
- From January 2019: -10%
- CPI consumer electronics: 0% for the month; -11.7% year over year.
- CPI appliances: +1.4% for the month, +1.4% year over year.
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