Retail sales rebounded 0.8% in October 2018 from September 2018, but it’s the downward revisions to the prior months that are cause for attention. The estimates for particularly September were moved sharply lower. Total retail sales two months ago had been figured last month at $485.8 billion (unadjusted) originally, but are now believed to have been just $483.0 billion. The difference takes the growth rate underneath 3% for the first time since February 2017.
On a seasonally-adjusted basis, these revisions now suggest retail sales declined slightly in each of the prior two months before October. September storms are being blamed for weakness, but only Florence made US landfall during that month. In October, retail sales advanced despite disruption caused by Michael.
Gasoline sales in September weren’t as sharp compared to October.
Total sales last month were up just 4.6% seasonally adjusted on a year-over-year basis, differing widely from the 5.9% increase unadjusted. A big part of either number was retail sales recorded by gasoline stations, those rising more than 16% (both) in October from the previous year. Removing gasoline sales, retail sales otherwise gained just 3.6% (seasonally adjusted) or 4.9% (unadjusted).
Hurricanes, therefore, were not really the problem. The deceleration in consumer spending back toward recession-like levels began months before them. Starting in June, for five months retail sales have exhibited clear weakness despite, rather because the large increase in spending at filling stations. Americans are again paying more for gas leaving not much room for anything else.
Including the contributions from gasoline, over the last five months (including revisions to August and more so September) total retail sales have increased by only 1.5%. That adds up to a very low 3.6% annual rate. A five-month lull reduces the chance this slowdown is the product of very short-term events like hurricanes.
Taking out gasoline stations, retail sales are up just 1.1% meaning a 2.6% annual rate. Going back to last December, excluding gas retail sales are rising at a 3.4% annual rate. These are very bad indications. If oil prices continue to decline after a lag total retail sales will converge in growth rates with those not counting gasoline.
