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Retail sales and the consumer
Why a noisy monthly number about shopping matters, and which part of it economists actually watch.
What it is
The Census Bureau's advance retail sales report lands around the middle of the month at 8:30 AM Eastern and estimates what stores, restaurants and online sellers took in during the prior month, in dollars. It is one of the earliest reads on consumer spending, which is the biggest piece of the economy.
Reading it
The print is the month over month change in nominal sales, so a month of higher gasoline prices lifts the headline without anyone buying more gas. Autos are big and lumpy. That is why economists watch the control group, which strips out autos, gasoline, building materials and restaurants, because that is the slice that feeds directly into the GDP consumption estimate.
Retail sales are revised, sometimes substantially, and the advance sample is smaller than the final one. A single strong or weak month rarely changes the story; three in a row does.
How it connects
Strong sales with cooling inflation is the combination the Fed wants to see. Strong sales with hot inflation keeps rates high. Weak sales and rising jobless claims together are how slowdowns usually announce themselves.