Americans are in a bad mood, but that hasn’t dampened their spending: splurging on retailers, especially some retailers

Retail therapy in bars and restaurants, cannabis stores and e-commerce? Other retailers not so lucky.

By Wolf Richter for WOLF STREET.

Retail sales jumped 0.9% in April from March, after jumping 1.4% in March from February, to $678 billion, and rose 8.2% from to a year ago, seasonally adjusted, the Commerce Department reported today. Retail sales are only sales of goods and not of services. And we’ve been seeing for months now a widespread shift in consumer spending from goods to services, where spending had crashed during the pandemic but is now rising.

These retail sales today confirm this trend: despite the shift in spending towards services, consumers are still spending huge amounts on goods, and retail sales growth is close to the rate of inflation, with growth “ real” (adjusted for inflation) trending downwards. , because expenditure on services, corrected for inflation, largely compensates for it.

Consumers are in a bad mood, but that hasn’t dampened their spending.

Soaring inflation has outpaced income growth for many Americans, and they are also shifting their spending toward services. And yet, retail sales continued to rise, including online sales. What’s fascinating, in terms of the changes, is that there’s a big boom in bars and restaurants, and miscellaneous stores, which prominently include cannabis retailers – where sales have far exceeded the inflation rate.

The surge in sales comes even as consumer sentiment in May fell to its lowest level in a decade, according to the University of Michigan Consumer Sentiment Survey. Overall sentiment was battered by worries about runaway inflation that has spread to all sectors of the economy and is hitting consumers daily (data via St. Louis Fed and Consumer Survey from the University of Michigan):

Retail therapy? It’s as if consumers are trying to overcome their grief and anger over inflation with classic retail therapy to feel better – and they’re doing it in bars and restaurants, specialty stores that include shops of cannabis and with e-commerce. Other retailers are not so lucky.

Sales at dealerships of new and used vehicles and parts, the largest retailer category, rose 2.2% in April from March to $132 billion, seasonally adjusted, but down 1.7% from a year ago. Used vehicle prices began to decline month over month, although they remain much higher than a year ago, while new vehicle prices continued to climb at a steady pace. record as new vehicle dealerships have terribly low inventories. And retail dollar sales are the result of this mix:

E-commerce sales and other “non-store retailers” rose 2.1% seasonally adjusted in April from March, to $107 billion, and was up 12.7% year-over-year. It is the second largest category of retailers and includes the e-commerce operations of traditional brick-and-mortar retailers, such as Walmart:

Food and Beverage Stores: Sales fell 0.2% for the month to $77 billion, seasonally adjusted, but still rose 7.1% year-on-year, driven entirely by price increases :

Food services and drinking places: The sales of these bars, restaurants, cafes, cafeterias, etc. jumped 2.0% for the seasonally adjusted month to a record $84 billion, and 19.8% year-over-year. This growth rate is nearly thrice the CPI inflation rate for “food outside the home” (7.2%), which indicates that people are going out to splurge and have fun and perhaps stifle their bad mood with the appropriate cash, and they spend heroic sums to do this.

General Merchandise Stores: Sales were essentially flat for the month at $57 billion, seasonally adjusted, and were up just 0.8% from the stimulus fueled in April a year ago. Walmart and Costco are in this category, but not major stores.

Service stations: Sales fell 2.7% for the month, due to lower gasoline prices, to $62 billion, seasonally adjusted. Year-over-year sales were still up 36.9%, fueled entirely by soaring gasoline prices year-over-year.

Stores of building materials, supplies and garden equipment: Sales were roughly flat for the month at $43 billion, for a year-over-year gain of 1.7% from Stimulus Miracle April:

Clothing and accessories stores: Sales increased 0.8% for the month and 8.0% year over year to $26 billion, seasonally adjusted:

Miscellaneous in-store retailers (including cannabis stores): Sales rose 4.0% for the month to a record $15.9 billion (seasonally adjusted) and were up 19% from a year ago. This category tracks specialty stores, including cannabis stores that have become one of the hottest trends in brick-and-mortar retail as part of the black market emerges:

Department stores: sales rose 1.1% for the month, to $11.5 billion, and were up 2.9% from a year ago. Price increases compensated for volume decreases. From the peak in 2000, sales were down 42% as this store format fell out of favor with Americans, causing thousands of stores to close and many bankruptcies:

Furniture and home furnishings stores: Sales rose 0.7% for the month (seasonally adjusted) and, at $12 billion, were up just 0.8% year-over-year, despite price increases:

Sporting goods, hobby, book and music stores: Sales fell 0.5% for the month to $8.9 billion (seasonally adjusted), and were down 5.4% year over year:

Electronics and appliance stores: Sales rose 1.0% for the month to $7.8 billion, seasonally adjusted, but fell 5.2% year-over-year. This segment only covers sales at specialty electronics and appliance stores, such as Best Buy or Apple stores. Electronics and appliances is a large business that is spread across many types of retailers, such as general merchandise and e-commerce retailers, and sales of electronics and appliances at these retailers are included in their segments (above).

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Joseph E. Golightly