Retail Sales Edge Up, Overall Economy Grows “Modestly” (Or Was That “Moderately”?)

As usual, some kinds of retail are doing better than others.

Two reports of interest to the real estate industry came out on Wednesday: retail sales numbers from the Census Bureau and the Fed’s Beige Book, formally known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District. One is statistical, the other anecdotal, but both pointed to flat-ish growth, at least for now, but not everywhere or in every sector of the economy.

U.S. retail and food services sales for September, which the bureau adjusts for seasonal variation and holiday and trading-day differences, but not for price changes, came in at $447.7 billion, a trifling increase of 0.1 percent from the previous month, and 2.4 percent above September 2014. That’s a little ahead of the paltry rate of inflation, though if you remove cars from the calculations, the annual growth rate was only 0.8 percent. Moreover, the July to August 2015 percent change was revised from a gain to 0.2 percent to virtually 0.0 percent. For whatever reason, consumers overall are holding onto their dough.

As usual, some kinds of retail are doing better than others. On a year-over-year basis, for instance, car sales are still strong: up 8.8 percent. Also in the winning column were food and drinking places, which enjoyed an increase of 7.9 percent for the year (though grocery stores only managed a 1.6 percent gain; people want to eat out, it seems). Clothing and accessories stores gained 4.7 percent since last year, and sport goods, hobby, book, and music stores gained 5.5 percent. As expected, department stores—the Charlie Brown of the modern retail world—barely eked out any kind of year-over-year gain in sales in September: up 0.2 percent. But at least that’s better than electronics and appliance stores, which suffered a 5.8 percent drop in sales since last year. Could be the Internet is eating their lunch more than in most sectors.

As for the Beige Book, it said that reports from the 12 Federal Reserve Districts point to continued “modest expansion” in economic activity during the reporting period from mid-August through early October. Even so, residential real estate activity improved since the last report, with almost all districts reporting rising prices and sales volume. One exception was the Chicago District (which is larger than just Chicago, as all the districts cover more territory than their name implies), where prices and sales volume were generally steady. A number of districts noted that the market for lower or moderately priced homes has outperformed the high end of the market.

Commercial real estate markets have shown signs of strengthening in all 12 districts, the book reported. Most districts noted improvement across all major segments, though New York and St. Louis noted some increased slack in the market for retail space. Commercial construction was also stronger in most districts. New York, however, noted some pullback in new commercial construction, though commercial real estate activity overall remained fairly brisk.