Commentary Directory

US Retail Sales Grow at Fastest Monthly Rate Since the Start of the Year

Jacob Hess
September 14, 2023

US retail sales expanded once again in August, extending a streak of gains to five months. In August, the headline growth of retail sales was 0.6% MoM which is the fastest since January 2023. The annual rate of growth only slowed by -0.1 ppts to 2.5% YoY last month. The more core measure of total retail and food services sales was up just 0.2% MoM since gasoline sales played a significant impact in the headline number. No matter where the spending is going, one thing seems to be true, the US consumer is still spending and proving to be resilient in the face of increasingly murky economic waters.

As evidenced by the difference between the headline and core figures in August, there was a significant increase in gasoline sales of 5.2% MoM. The increase in gas sales was almost entirely the result of rising energy prices. In the CPI report yesterday, we saw that the gasoline index increased a sharp 10.6% MoM which meant that drivers in August were paying a hefty premium. Despite the jump to end the summer, the YoY growth in gas sales is still sharply negative at -10.3% YoY (though this is much higher than the -20.9% YoY in the month before).


Growth rates in other categories were mixed. There was growth in clothing sales (0.9% MoM), electronics (0.7% MoM), and health & personal care sales (0.5% MoM). On the other hand, there were some categories that saw significant moves down like sporting goods sales(-1.6% MoM), miscellaneous store sales (-1.3% MoM), and furniture sales (-1.0% MoM). It is worth pointing out that the furniture and building materials store segments have the worst YoY growth rates (excluding gas sales) at -7.8% YoY and -4.9% YoY respectively because they are related to more expensive purchases that may require consumers to need access to credit to purchase. Additionally, both have some relation to the real estate industry which is currently the most struggling area of the economy. The fact that both of these categories saw their YoY declines intensify suggests that there is some underlying consumer weakness that is being hidden by rosier headline results.

The bottom line is that as long as consumers are spending, the economy is growing. And at the moment, retail spending is keeping pace with price growth and in some cases slightly ahead of it. There are some underlying trends that point to weakness ahead, but so far in Q3, it looks like consumption will be on track to be a positive contributor to GDP growth. Of course, things can and likely will change as tighter financial conditions eventually show out in full force. For now, resilience is the keyword.