With the report of April consumer inflation this morning at +0.3%, we now know that April real retail sales declined by -0.2%. This is a true mixed reading.
While April declined, the upward revision to March retail sales means that month increased by +1.2% in real terms. The combined two month increase was +1.6% over the average of January and February, which shows just how much of a spring bounce there has been compared with the dead of most of the country's unusually severe winter. As a result, as revised March set a new post-recession high:
This in turn suggests the economic expansion will remain intact well into 2015 at least.
But since nearly everybody concedes that the "winter weather excuse" this year was real, and the data sure seems to be confirming that, let's average the first four months of this year, and compare it with the first and last four month's of last year, for a sequential and YoY comparison.
When we do that, we find that sequentially real retail sales were 182.3 in the last four months of last year vs. 182.6 in the first four months of this year, for a gain of +0.2% and real sales were 180.2 in the first four months of last year, so the YoY gain is only +1.3%.
Here's the monthly YoY change in real retail sales since January 2012:
The decelerating trend shows up more clearly on this YoY look at real retail sales averaged by quarter for the last 10 years:
The gradual deceleration in growth, averaging about -1% a year, is clear. Should this trend continue, real retail sales will make an expansion high at some point in the next 12 months, and by mid-year of 2015 will have turned negative YoY. That does not bode so well for at least later next year.
Like I said, a true mixed reading.