Retail Sales – Always have to check under the hood!

Yesterday we had the release of advanced retail sales data for March which came across as disappointing at first look and downright miserable according some peoples reviews. On top of that, the “control group” which is a component of GDP and PCE calculations was also to the downside for the month. Just looking at what is excluded to form this “control group” doesn’t really make sense in my opinion because prices fluctuate in all areas, but purchases are still made. That being said, there are plenty of bones to pick with GDP calculations and government surveys so I’m just going to stick to the hard facts on this one. When you get inside this report and look around you will see several categories that are either near all-time series highs or close to the pre-crisis highs of 2005/2006. For example in Clothing and Clothing Accessories, the March print of $21.47 billion is the second highest in series history with the highest print of $21.69 billion having just come in November 2014. In the Furniture and Home Furnishings category, Q1 2015 sales averaged $8.62 billion which would be on pace to be the best year since 2007 when sales averaged $9.28 billion. Next up is the Building Material, Garden Equipment and Supplies Dealers group where Q1 2015 sales are running at the highest level in series history with the March print also being the highest amount since April 2006! Then in the Sporting Goods & Hobby category Q1 sales are also running at their best pace in series history. Last but certainly not least comes the Food Services and Drinking sector which continues to accelerate with a Q1 year over year growth rate of 8.8% with March also being the highest sales print in series history. So inflation does seem to be alive in the retail sales world just looking at these sales comps. Gasoline Stations were the obvious drag on the month with a roughly 23% decline in sales from Q1 2014. All in all, Q1 2015 had 11/13 categories show positive year over year growth and if we back out gasoline stations, we had nearly 4.5% growth across the board! As usual it’s easy for people to just say the report is generically weak, but when you look under the hood, you can see the engine is solid and humming along.

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