Ouch.
This shows the Retail and Food Servies, total sales, the Retail and Food Servies, total minus Gasoline Stations sales, and the Retail and Food Servies, total sales minus Gasoline Stations sales, Food and Beverage Stores sales, and Food and Drinking Places sales.
The government tells us it is often easier to see what's really going on if we exclude volatile food and energy. I actually believe that. Just look at the blue line. Do you feel more prosperous? I certainly don't feel more prosperous putting $3 gasoline in my car than when I was putting $1 gasoline in my car. It is all the same fluid to me.
If 1992 to 2000 marks a prosperous era, what does 2000 to present represent? More specifically, what does 2005 to present represent? I would argue stagflation.
Source Data:
U.S. Census Bureau: Monthly Retail Sales
St. Louis Fed: Population: Mid-Month
St. Louis Fed: Consumer Price Index For All Urban Consumers: All Items
Update: There was an error in my CPI adjustment for gasoline (I wasn't adjusting it!) and it has been fixed. Sorry about that. The conclusions remain the same though.
Update 2: I spotted the following while attempting to answer a question left for me in the comments.
Calculated Risk: Monthly Retail Sales, November 14, 2006
Mark, why would you CPI adjust gas station sales in the first graph? CPI has very little to do with fuel costs because of the way it is calculated.
ReplyDeleteWhat you are really showing is the effect that high gas and food costs are having on the rest of mass-market retail. There are enough prosperous souls left to provide a good market for high-end stuff, but anything that is sold to 80% of consumers is coming under pressure.
I think the expanding spread between total retail and ex-gas in the second graph makes that point nicely.
If you are a mass-market retailer or restaurant chain, it's quite frightening to contemplate diminishing MEW money and high consumer debt loads.
Mark, why would you CPI adjust gas station sales in the first graph? CPI has very little to do with fuel costs because of the way it is calculated.
ReplyDeleteWhoops! I meant to adjust the price but had an error in my formula. It is actually the unadjusted price.
I'm very confused why you suggest I wouldn't want to adjust the price for consumer price inflation. Gasoline is a consumer good, just like everything else we buy.
maxedoutmama,
ReplyDeletePut another way, the price of gasoline was 27 cents per gallon in 1949. It is now $3.00 a gallon.
The CPI was 23.8 in 1949. It is now 208.
Most of the increase in the price of gasoline has simply been inflation.
In 2007 dollars, the price of gasoline in 1949 was 208/23.8 * 27 cents, or $2.35.
In any event, I'm sure glad you asked the question!! There was a flaw in my formula and I fixed it.
(Some days I could sure use an editor looking over my shoulder, lol.)
And lastly, for your main point.
ReplyDeleteWhat you are really showing is the effect that high gas and food costs are having on the rest of mass-market retail. There are enough prosperous souls left to provide a good market for high-end stuff, but anything that is sold to 80% of consumers is coming under pressure.
I think it paints a fairly ugly picture. Something is bound to break someday if we simply keep on the path we are already on.
Does the gas station sales number include food sold at gas stations?
ReplyDeleteDoes it include the state tax on gas?
I had expected it to be down more as the consumer is spending less, trucking is less, UPS less, so I am mildly surprised.
Great questions!
ReplyDeleteDoes the gas station sales number include food sold at gas stations?
It would include all things sold at gasoline stations, and I believe that would even include auto repair.
Does it include the state tax on gas?
I'm not sure.
I had expected it to be down more as the consumer is spending less, trucking is less, UPS less, so I am mildly surprised.
Perhaps the high price of gasoline is mostly repsonsible for keeping overall sales elevated.
Overall gasoline station sales, that is.
ReplyDeleteMark,
ReplyDeleteLooking at those graphs, retail sales have been flat since ~Fall 2004. All of the added income, post CPI, has gone to food and gasoline.
Oh boy...
Just wait for wages to drop and J6P to be fully cut off from easy credit.
Got popcorn?
Neil
Neil,
ReplyDeleteJust wait for wages to drop and J6P to be fully cut off from easy credit.
Perhaps the government can somehow magically create some anti-stagflation for us using a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. (Ben Bernanke, 2002)
Then again, perhaps not.