Retail sales were down 0.3 percent for the month of August, the first month of decline since March, as the turbulent economic headwinds that have blown for much of the year show signs of persisting into the fall.
Retail, eCommerce and restaurant sales fell 0.3 percent in August to $456.32 billion, according to data released on Thursday (Sept. 15) by the Commerce Department; in July, retail sales rose a modest 0.1 percent, and retail figures have not seen a monthly dip since March prior to this point.
Not counting auto sales, which have seen a slowdown in recent months, as consumers seem less likely to be in the market for new cars, overall retail sales fell 0.1 percent in August. The Wall Street Journal had forecast a 0.1 percent retail sales fall in August but predicted that those figures would actually amount to a 0.2 percent increase after auto sales were removed from the equation.
“Consumption is slowing in the current quarter, which should diminish hopes of an above 3 percent rebound in overall growth,” RSM Chief Economist Joseph Brusuelas told WSJ.
Retail sales have been pretty soft for most of 2016. Although unemployment now sits below 5 percent and median household income jumped 5.2 percent in 2015 (the first increase in median income since 2007), sales have grown by just 2.3 percent over the past 12 months, which is half the rate of growth as two years ago, according to MarketWatch.
Despite these factors and other signs of a healthy economy, the prices of almost everything seem to be falling or stagnant. Gas station sales have dropped 11 percent in the past year, while food prices, which climbed at a rate of 5 percent last year, have barely moved this year.
Auto sales are also beginning to noticeably lag behind, on pace for just a 2.5 percent sales increase in 2016 after climbing more than 6 percent in 2014 and again in 2015.
Even the restaurant biz, which rose at an 8 percent clip this year, has seen a barely noticeable increase of just 1.7 percent in sales so far this year, according to the government’s data.
The NPD Group noted that lunch restaurant visits, which makes up a third of all restaurant sales, declined by 4 percent last quarter, the steepest decline of any meal segment. NPD attributed the fall to more employees working from home (which means they are also eating at home) or using their lunch breaks to shop online rather than go out to eat.
“Simply said, who can afford to go out [to] lunch on a regular basis when checks have risen for some as much as they have recently?” Bonnie Riggs, a restaurant industry analyst for NPD Group, said in a statement. “Historically, food service lunch has been the occasion where consumers didn’t want to invest a lot time, money or energy into this meal. It’s apparent by the drop in lunch traffic that the current value proposition isn’t meeting these needs.”
If there was one bright spot in the figures the government released on Thursday, it was that non-store retailers, which includes the online sales sector, saw a 10.9 percent increase from Aug. 2015.
Officials at the Federal Reserve have been pointing to data for months that suggests the U.S. economy is strong and continually growing, which has raised the specter of another looming rate hike. But Thursday’s retail figures, coupled with declining auto sales data and a disappointing August jobs report, appear to be making any increase in September more and more unlikely.
Fed officials plan to meet next week in Washington to discuss the potential of a hike, but financial markets believe there is now only a 12 percent chance of a rate hike in September, down from a 15 percent chance before the data was released, according to Reuters.
The Dow also rose more than 200 points on Thursday.
“With households not buying, manufacturers stopped producing. If the Fed is data-dependent, then the next time a hike would likely come is December,” Joel Naroff, chief economist at Naroff Economic Advisors, told Reuters.