Consumers are splurging, says the Wall Street Journal. Retail sales were up 0.7% in September, an annualized rate of 8.9%. Shazam!
But you might recall that inflation was high in September. If you adjust for that the annualized increase is only 3.9%. And if you compare retail sales to a year ago, the annual increase is a whopping 0.1%:
Some splurge, eh? After a year of declines retail sales have only barely climbed back to where they were last September. Hell, the Journal even has a chart showing that real retail sales have been flat for two years. Let's not get ahead of ourselves here.¹
¹And always adjust for inflation! When will people learn?
Not that I think it changes the picture at all (that this is normal spending), but housing price inflation remains much higher than headline inflation - meaning that there really would be a slight increase here (even in real terms) as the inflationary adjustment would be less if you only accounted for retail price inflation (i.e., housing prices are pulling the inflationary measure upwards). So maybe people really are buying 0.3-0.5% or so more than the previous period, but that's muted in the data by skewing from the housing prices.
If you believe, as I do, that housing should be given more than a 33% weight in the inflation calculations, it' would have a bigger impact than that, perhaps even putting this measure into a "real" decline. But it still shows as basically nothing but noise.
You often adjust for inflation when it makes no sense at all.
Inflation was high last month because of a spike in oil prices. So, retail spending, which doesn't include gas, actually DID surge.
If you want to make adjustments to the data, it really helps for your adjustments to make sense.
Kevins inflation adjustments often make the data he is presenting less accurate.
As you and others have said here, adjusting retail sales by the price change of gasoline and housing makes absolutely no sense at all.
We are all less informed because of it.
It's still a long way from recession.
Oct. 17, 2022, one year ago, Bloomberg Economics:
Forecast for US Recession Within Year Hits 100% in Blow to Biden
Sounds more like belated back to school shopping this year relative to last.
Should there be an adjustment for population changes? A growing population will spend more in total, even though per person spending declines.
I agree.
Kevin is complaining that 0.7% needs to be adjusted for inflation. He uses the wrong measure of inflation, but who's counting.
If the population grew then the number should be adjusted.
But if the population of rich people went down and poor people went up then that would be good, wouldn't it?
Do they measure the days of the week? September had an extra Saturday while August had an extra Tuesday, Wednesday, and Thursday. That seems like a critically needed adjustment.
Seriously, there are so many things that need to be adjusted but none of us can agree on how to make the adjustments and how often we would need to go back and revise numbers.
It is best to leave the raw data alone.