Retail sales in the United States are demonstrating impressive resilience, continuing to grow despite various limiting factors.
December Retail Sales Growth
In December, nominal retail sales rose 5.6% year-over-year (4.8% in real terms) and 11.7% over two years in nominal terms (adjusted for inflation of 5.8%).
Over the past 12 months, growth was 3.4% year-on-year or 2.1% inflation-adjusted. In addition, there has been an impressive 13.4% increase over two years.
Compared to 2019, the increase was 35% on a U.S. measure or 18.2% inflation-adjusted basis.
Data Sources and Adjustment
It's important to note that the Census Bureau only publishes nominal numbers and calculates real-term dynamics independently based on the PCE deflator for goods.
The retail sector is a substantial segment, contributing approximately $6.1 to $6.2 trillion in annual demand to the GDP.
Consumer demand accounts for 70% of the U.S. economy, while demand for goods represents about 27% of GDP, making it a significant component of the nation's economy.
Demand for goods is known to respond quickly to changes in household balance sheets, economic conditions, or consumer expectations. On average, retail demand responds to changes 3 - 5 months faster than demand for services.
Typically, this indicator serves as a gauge of the potential economic dynamics, given the prominence of consumers in the GDP structure and the strong correlation between retail sales and economic performance.
Conclusion
In conclusion, the strong growth in U.S. retail sales demonstrates the resilience of consumer demand and its key role in the economy. This strong performance serves as a valuable indicator of the overall health of the economy, emphasizing the importance of continuous monitoring to determine the country's economic trajectory.