The Census Bureau reported this morning that monthly sales for retail and food services increased 0.6% in June following a 0.5% increase in May. Hooray! Well, not so much. The increases were entirely due to rising gas prices (up 5% in both May and June) and to a bump in automobile sales (up 2.6%) as buyers snapped up bargains.
In dollar terms, retail sales in June were $342.1 billion, sort of. The number is adjusted for “seasonal variations and holiday and trading-day differences” to make month-to-month comparisons more meaningful. (We actually spent $350.7 million in June.) But, the number is not adjusted for price changes. This means that stable or outright falling sales are weaker than they appear, since a modest amount of inflation is the normal condition of our economy.
The chart below shows monthly retail sales in billions of dollars going back four years.
As you can see, spending is back to the level of summer 2005. We are now spending $35-40 billion less each month than two years ago. The economy is improving, but it’s a slow process with many a mile to go.