Retail sales gains between May and June showed relatively little growth, yet at least one economist from the National Retail Federation said the retail industry could be on the brink of the rapid growth everybody has been waiting for since the start of the Great Recession.
According to statistics released earlier this month by the US Department of Commerce, June retail sales in the US were $439.9 billion, up just 0/2% from May but 4.3% higher than June 2014. Total retail sales from April through June were up 4.5% annually.
Not including the sale of big-ticket products like automobiles, total retail and food services were in June increased 0.4% over May to $351.9 billion. That’s 3.7% higher than June 2013. The April to May 2014 increase was an increase of 0.5%, revised from an earlier 0.3% figure reported by the Commerce Department.
Flat, But Promising
Jack Kleinhenz, the NRF’s chief economist, said consumer retail sales — which includes everything except cars, gas and restaurants — were flat on a seasonally adjusted and sequential basis for the second straight month in May, but saw a 3.0% increase year over year. Kleinhenz said he prefers to look at the report optimistically.
“June retail sales reinforce the renewed strength of consumer confidence and marked increases in retail employment over the last few months,” Kleinhelz wrote on his blog published on the NRF website. “The upward revisions in April and May have provided positive signs of momentum for second quarter growth after a dismal first quarter. Retail sales gains were seen in many categories including electronics, health and personal care, clothing and apparel, sporting goods and general merchandise. The downshift in building and furniture sales continue to reflect the fits and starts of the housing market.”
Indicator of Where Economy is Heading
Retail sales are often an indication of how confident end-user consumers are in the strength of the economy. When consumers believe unemployment will remain low, the stock market will continue to rise and the long-term economic prognosis in the US is rosy, they are much more likely to spend money on products and services.
The first half of this year showed little, if any, growth in retail sales but much of this could be due to the harsh winter weather conditions which kept much of the country inside and out of the shopping malls and business districts during the first three months of this year. Now that spring and summer have brought warmer — if somewhat inconsistent and wet — weather conditions, a more normalized view of retail sales is available.
Optimism in Some Quarters
This head led many economists to be optimistic about the remaining three quarters of this year. One of them is Charles W. “Check” Clowdis Jr., managing director for transportation advisory services at IHS Global Insight.
“There are ‘positive pockets’ indicated that the pent-up demand is coupling with necessity spending to at lest continue the slow and positive trend in consumer spending,” Clowdis told Logistics Management. “We see more people dining out at more upscale restaurants than in the past several years, a good trend for the dining establishments and the carriers that transport food products. Now, if this trend spread with lowering unemployment figures, the economy may become robust at 2006 to 2006 levels again.”
“Baby steps are better than falling backward,” Clowdis said.