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March Retail Sales Were a Major Disappointment

April 13, 2016

by Doug Short

The Census Bureau's Advance Retail Sales Report released this morning shows that seasonally adjusted sales in March unexpectedly contracted. Headline sales came in at -0.3% month-over-month, which was substantially below the 0.1% increase forecast by Headline sales are up only 1.7% year-over-year. Core Retail Sales (ex Autos) were up 0.2% MoM, but that was below the forecast of a 0.4% increase. The popular financial press blames the headline number decline on weak auto sales. But note that the core data, which excludes autos, also came in below expectations.

The chart below is a log-scale snapshot of retail sales since the early 1990s. The two exponential regressions through the data help us to evaluate the long-term trend of this key economic indicator.

Retail Sales Trends

The year-over-year percent change provides another perspective on the historical trend. Here is the headline series.

Retail Sales YoY

Here is the year-over-year version of Core Retail Sales.

Core Retail Sales YoY

Retail Sales: "Control" Purchases

The next two charts illustrate retail sales "Control" purchases, which is an even more "Core" view of retail sales. This series excludes Motor Vehicles & Parts, Gasoline, Building Materials as well as Food Services & Drinking Places. The popular financial press typically ignores this series, but it a more consistent and reliable reading of the economy.

Control Sales Trends

Here is the same series year-over-year. Note that the current level is below the highlighted values at the start of the two recessions since the inception of this series in the early 1990s.

Control Sales YoY

For a better sense of the reduced volatility of the "Control" series, here is a YoY overlay with the headline retail sales.

Headline and Control YoY

Bottom Line: The March sales and is yet another reminder of the ongoing weakness of the US economy.