CONCEPT OF THE DAY: RETAIL SALES REPORT
As part of our dual mandate to rebrand the dismal science’s moniker into the ‘decision’ making science as well as to lower the barrier to understand and access economic concepts without a formal economics degree, we’re rolling out a definition of the day (or week) to further these goals. Today’s concept of the day: Retail Sales Report.
WTF IS THE RETAIL SALES REPORT?
The Retail Sales Report (RSR) is released monthly, on or around the 15th by the US Census Bureau. It is a sample of roughly 5,500 firms taken from the larger Retail Trade Survey to act as a benchmark for the larger population of 3 million retail and food services firms¹.
WHY SHOULD WE CARE ABOUT THE RETAIL SALES REPORT?
Because it provides some useful insight, via several data points, into the possible direction of the general price level (inflation) and the direction of the overall economy. At close to 70%, the largest component of US Gross Domestic Product (GDP) is personal consumption expenditures, which is basically another name for consumer spending. Consumer spending has two main components: (1) private spending on services and (2) private spending on retail goods. The retail sales report is a proxy for where consumer spending might be heading. The RSR survey also tracks consumers’ purchases of the two types of goods; durable goods and non-durable goods. As a final benefit, the RSR also compares the current month to data from the previous months, the previous year and from the beginning of the current year. For those reasons, the Federal Reserve, investors, analysts, and market traders pay close attention to this report².
OK, SO WHAT'S IN THE REPORT?
The report contains sales info on 13 types of retail sectors. The motor vehicle dealers and parts sector has historically accounted for the largest sector in the survey. Others sectors include:
- Health and personal care
- Gas Stations
- Food services and drinking places (Restaurants and bars)
- General merchandise stores
- Clothing stores
- Furniture and home furnishing stores
- Food and beverage stores
So whether we want to understand our present situation, look back at how one period compares to another, or forecast when the economy might turn the corner (for better or worse), the Retail Sales Report represents a useful tool in our economics toolbox.
References
- “Monthly Retail Trade, Main Page – US Census Bureau.” U.S. Census Bureau, https://www.census.gov/retail/index.html. Accessed 8 October 2022.
- “About the Retail Sales Report.” CME Group, https://www.cmegroup.com/education/courses/learn-about-key-economic-events/about-the-retail-sales-report.html. Accessed 8 October 2022.
Check out the video segment below as analysts Ted Rossman (Bankrate.com) and Sucharita Kodali (Forrester Research) discuss elements of the July Retail Sales Report that were of interest to them.