Retail Sales

There's discussion about how to interpret the latest retail sales figures - William Polley has the links, as does James Hamilton. The main point is one we've heard many times, be careful about interpreting monthly data as it is very noisy. To see this graphically, here's something I put together the last time the retail sales data came out to make a similar point, but never got around to posting (this is updated with the latest data):

As you can see, the average over five months is fairly stable, but there is a lot of noise in the monthly series, too much to make much of a single months movement (William Polley looks at the large standard errors). Here are typical movements by month, along with historical data for July and August:

There isn't much information to be gleaned from monthly retail sales data even though, as William Polley documents, that doesn't stop people from doing so. For a bit more, this post links quarterly retail sales to nominal GDP.

Comments

[spencer]

The sample for retail sales is only one-third of the firms so it takes three months to get a full sample.
this is one of the reasons it is so volatile. I often say the most significant information in the retail sales report is the direction of the revisions.

I use the BEA unpublished retail sales data because they also publish real retail sales data. Last month this series showed that total real retail sales growth had slowed to 2%. But excluding autos & parts the growth rate was still 8.7%-- what may be a record divengence between the two series.

Moreover, in the recent data if you exclude autos and fuel the increase was 0.4%. I do not have this exact deflator but since the deflator for GAFO sales is running at a minus 2% to minus 3% rate it probably is negative. That mean that real sales excluding autos and fuel was probably something on the order of 0.5%-
0.6% or still at a 6% to 8% rate.

[Movie Guy]

Ha. I was going to post that Spencer was the person to ask about retail sales.

And here he is.

Good.

says...

Hey, MG, you need to be quicker. So much to tell us, but make it snappy or we'll think you are just trying to look good after the fact.