The Census Bureau released its estimates of retail sales for the first six months of the year, and the results are encouraging in some ways and very discouraging in others. Almost as much money was spent in the first half of 2020 as in the first half of 2019, and more money was spent in June of this year than in June of last year. But it all depends on what you are trying to sell. And the results are pretty predictable.
Figure 1 shows the change in retail sales between the first half of 2020 and the first half of 2019. The Census report also includes food and beverage services, which are not normally counted in with retail.
The big winner, of course, is the non-store retail category, which includes Amazon and other pure-play internet retailers. Food and beverage stores were selling all the food that would otherwise have been consumed in restaurants. Building materials? Well, think of all the home and garden improvements that got done when people could not do anything else. General merchandise stores includes the big boxes like Fred Meyer, Target and Walmart, all of which were allowed to say open while other retailers closed.
The big losers were items that were not considered essential, like furniture, clothing and appliances. In many cases the stores were simply not open, and in others, cautious consumers could get by with last year’s model.
The red bars show totals. The longer bar includes food and beverage services, and the shorter bar shows the change in the total for just retail. The drop of just 1 percent might seem surprising, given the turmoil in retail markets. But remember, things were pretty normal through mid-March, and people substituted across categories: don’t worry about how you look but replace those window blinds you never liked. Another explanation is seen in Figure 2, which compares retail sales between June 2019 and June 2020.
Here we see that in a number of categories, June 2020 sales were higher than the previous year. Total retail, including food and beverage, is slightly higher in June 2020 than June 2019, but would be slightly lower after adjusting for inflation and population growth. Home improvement continues to shine, as does the broad sporting goods, books, hobbies, music category. Motor vehicle sales bounced back, with June the highest month of the year.
These results underscore the strangeness of current economic conditions. As the Indexer keeps noting, there is a lot of money out there, and the data show that it is being spent. But it is being spent quite differently, and some categories of retail are really getting hammered while others are thriving. Retail bankruptcies are regularly announced, while Home Depot’s stock is up for the year. And Amazon’s stock is up 38 percent from the February market peak.
We keep telling the same story: no one knows how many of the “trends” of the past few months will stick around. Are we going to begin buying lots of clothes and let gardens go back to the weeds? Will the retailers who hung in see their customers come back as the malls open? It will almost certainly be the case, as we are seeing in other parts of the economy, that the large get larger as the small disappear.