Nonstore retail sales surged 2.0 percent in August. Should the Fed be cutting rates?
Please consider the Census Department Advance Estimates of U.S. Retail and Food Services for August 2025.
Advance estimates of U.S. retail and food services sales for August 2025, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $732.0 billion, up 0.6 percent (±0.4 percent) from the previous month, and up 5.0 percent (±0.5 percent) from August 2024.
Total sales for the June 2025 through August 2025 period were up 4.5 percent (±0.4 percent) from the same period a year ago.
The June 2025 to July 2025 percent change was revised from up 0.5 percent (±0.4 percent) to up 0.6 percent (±0.2 percent).
Nonstore retailers were up 10.1 percent (±1.2 percent) from last year, while food service and drinking places were up 6.5 percent (±1.8 percent) from August 2024.
Upward Revisions
Last month I commented “The strongest part of the report was the upward revision to June. Otherwise, the report matched the Bloomberg Econoday Consensus.”
This month we see another upward revision, albeit smaller, from 0.5 percent to 0.6 percent.
Nonstore sales are simmering.
Inflation Adjustments
The key phrase from the commerce departments is “adjusted for seasonal variation and holiday and trading-day differences, but not for price changes.”
It’s “real” inflation-adjusted sales that matter to GDP. Few analysts report on real sales, but I do.
Real Advance Retail Sales Month-Over-Month
Real Month-Over-Month Details
- Total: 0.2 percent
- Excluding Motor Vehicles: 0.3 percent
- Excluding Motor Vehicles and Gas: 0.3 percent
- Motor Vehicles: 0.1 percent
- Food Stores: -0.1 percent
- Nonstore (think Amazon): 1.6 percent
It’s important to look at real numbers because that is what drives GDP.
Inflation added 0.4 percent to all of the numbers.
Real vs Nominal Retail Sales Since 1992
Real vs Nominal Retail Sales Detail
Real vs Nominal Retail Sales Percent Change From Year Ago
Percent Change From Year Ago Details
- Nominal Retail Sales: 5.0 Percent
- Real Retail Sales: 2.0 Percent
The adjusted charts put a badly-needed perspective on things. They show the alleged strong consumer is really a mirage of inflation.
Should the Fed Be Cutting Rates?
The only reason to cut rates is a weak labor market. Price inflation (and more is coming from tariffs) say hell no.
But the question is moot. The Fed has made up its mind to cut rates, so it will. It will be interesting to see what debate there is over these details at tomorrow’s FOMC meeting.
Related Posts
September 12, 2025: Consumer Sentiment Sours in September, Inflation Expectations Rise
Sentiment downturn strong in lower- and middle-income levels.
September 11, 2025: Food Prices Spike Again in August. What’s in Your Basket?
The CPI was up more than expected in August. Food played a role.
September 11, 2025: CPI Provides No Reason for Fed to Cut Interest Rates, It Will Anyway
The CPI was higher than expected in August, but the Fed will do what it wants to do.
Tomorrow, the Fed will cut interest rates. The discussion should be interesting.
