Retail Sales’ Straightforward Stats
People tend to spend more when they earn more. More goods will be produced to cash in on the spending, and more jobs will be created to produce them.
So, when retail sales are doing well, we can say with (certain) confidence that the economy is not too shabby—especially in the United States, where consumer spending accounts for more than two-thirds of the GDP.
The economic indicator tracks the purchases of finished goods over 13 categories, such as clothes, food, electronics and cars. By finished, we mean the final product sold by retailers, and not the raw materials that manufacturers buy from the get-go, or the goods that wholesalers buy from them: think of what you buy in stores.
The core retail sales indicator tracks the same thing, except that it omits spending on automobile, gasoline, food services and building materials: Their prices tend to skew the overall numbers. Another indicator called consumer spending includes services purchased, whereas retail sales focuses on goods sold.
Retail sales are measured in dollars, but as people look at them to see how much they have risen or fallen year on year, graphs are often expressed in percentages. Andince people are buying all the time, retail sales are pretty up to date. The U.S. Census Bureau updates the data monthly, and shows the total number of sales over the past month, as well as the percentage change. Sales commonly rise in October and peak in December, in concurrence with the holiday season.
It's no surprise that the biggest dip in years reared its ugly head during the beginning of the COVID-19 pandemic in the States in early 2020. Nobody was buying anything because the country was in lockdown, but also because so many people lost their jobs and thus their spending power.
All people could do during that time was sit and wait — there wasn’t much to spend on, even for the rich. After months of saving up and realizing just how bad they were at cooking, citizens were eager to eat out and spend when restrictions were lifted in mid 2020.
Of course, the pandemic didn’t end, so the boost in retail sales didn't last long, either. Retail sales have since fluctuated month by month in sync with the pandemic situation, and will continue to do so until people see an “end” to the pandemic and consumer confidence is restored.
