US Retail Sales: What is the Reason for Increase in US Retail Sales in August 2023?

US Retail Sales

Advance estimates of U.S. retail and food services sales for August 2023, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $697.6 billion, up 0.6 percent (±0.5 percent) from the previous month, and up 2.5 percent (±0.7 percent) above August 2022.

Total sales for the June 2023 through August 2023 period were up 2.2 percent (±0.4 percent) from the same period a year ago. The June 2023 to July 2023 percent change was revised from up 0.7 percent (±0.5 percent) to up 0.5 percent (±0.2 percent).

Retail trade sales were up 0.6 percent (±0.5 percent) from July 2023, and up 1.6 percent (±0.5 percent) above last year. Gasoline stations were down 10.3 percent (±1.1 percent) from last year, while food services and drinking places were up 8.5 percent (±2.3 percent) from August 2022.

What is the Reason for Increase in US Retail Sales in August 2023?

The increase in U.S. retail sales in August 2023 can be attributed to a few key factors. Firstly, higher gas prices played a significant role, with spending at gas stations surging by 5.2% during the month. This increase was primarily driven by spiking oil prices, resulting from OPEC+ production cuts, strong demand, and disruptions caused by a deadly flood in Libya.

These factors led to higher prices at the gas pump, with the national average for regular gasoline reaching $3.86 per gallon, the highest level in 10 months. Additionally, while spending on other items grew modestly, it contributed to the overall increase in retail sales for the fifth consecutive month. This combination of factors led to the stronger-than-expected retail sales figures in August.

What Does US Retail Sales Data Mean?

US retail sales data is a crucial economic indicator that provides insights into consumer demand for finished goods. It serves as a monthly snapshot of the direction of the economy. This data is reported by the U.S. Census Bureau and helps gauge economic health and the presence of inflationary pressures. Retail sales encompass both durable and non-durable goods purchased over a specific period, derived from various types of retailers, including food service and retail stores. 

Since consumer spending constitutes a significant portion of the gross domestic product (GDP), retail sales serve as a vital measure of the overall economic health, influencing whether the economy is expanding or contracting.

Positive retail sales figures often lead to stock market gains, benefiting shareholders of retail companies. Conversely, bondholders may view lower retail sales as a potential sign of economic contraction, leading to decreased inflation and higher bond prices. These figures capture a wide range of sales, from in-store purchases to catalog and other out-of-store sales, covering both long-lasting and short-lived goods. In essence, US retail sales data is a key barometer of economic vitality and consumer behavior.

Are Retail Sales Down in the US?

Retail sales in the United States showed mixed results in August 2023. When we exclude sales at gasoline stations, retail spending increased by a more modest 0.2% compared to July.

Across various categories, there were fluctuations: sales at restaurants and grocery stores saw increases, while sales of furniture and at specialty stores, like those selling sporting goods, declined by 1% and 1.6%, respectively. Notably, online retail sales remained flat in August after a surge in July, partly due to Amazon's Prime Day promotion.

Despite 11 interest rate hikes by the Federal Reserve aimed at cooling demand, the U.S. economy remains robust, supported by a strong job market. However, as we move into the latter part of the year, American consumers are facing several economic challenges, including the resumption of student loan payments and stricter lending standards, which could potentially slow down spending.

While the consumer outlook is generally positive, there are emerging headwinds to watch, including reduced consumer savings and the return of student loan obligations this fall.

How Big is The Retail Industry in The US?

At the conclusion of 2022, the total retail sales had reached approximately 7.1 trillion U.S. dollars, reflecting an increase of roughly half a billion U.S. dollars compared to the previous year. The retail industry in the United States was massive, generating revenue of over seven trillion U.S. dollars. It's expected to continue growing, with projected total retail sales of around 7.9 trillion U.S. dollars by 2026, up from approximately 6.6 trillion U.S. dollars in 2021.

This vast industry encompasses various types of retail establishments, including grocery stores, restaurants, and bookstores, with approximately four million such establishments across the country. Notably, many of the world's leading retailers are American companies, like Walmart and Amazon, which operate globally. The success of U.S. retailers extends to online sales, with companies like Amazon experiencing significant growth in their sales revenue in recent years.

What is The Largest Retail Industry in The Us?

The largest retail industry in the United States is dominated by Walmart, which remains the top US retailer. In 2022, Walmart achieved retail sales of $499.7 billion in the US, marking a 7.8% increase compared to the previous year. Moreover, Walmart expanded its store presence across the country, growing from 5,326 stores in 2021 to 5,330 in 2022.

Amazon, the second-largest retailer in the US, reported $232.5 billion in US sales in 2022, marking a 6.7% annual increase. While slightly slower than Walmart's growth, Amazon managed to increase its share of US sales from 66% in 2021 to 68% in 2022.

Costco Wholesale takes the third spot among the largest US retailers, with US sales surging by an impressive 16.9% year-over-year to reach $164.2 billion in 2022. The Kroger Co. stands at fourth place, with sales growing by 7.5% to $147.6 billion in the same year.

Rounding out the list of the top five largest retailers in the US is The Home Depot, reporting US retail sales of $145.9 billion in 2022, reflecting a 4.3% growth.

Completing the list of the ten largest retailers in the US, in order of their retail sales figures for 2022, are:

• Target: $107.6 billion
• CVS Health Corporation: $106.2 billion
• Walgreens Boots Alliance: $103.9 billion
• Lowe’s Companies: $89.3 billion
• Albertsons Companies: $76.2 billion

US Retail Sales Forecast

The forecast for total retail sales in the United States looks promising. It is projected to increase from around 6.6 trillion U.S. dollars in 2021 to approximately 7.9 trillion U.S. dollars in 2026. These figures encompass both traditional retail and e-commerce sales. The retail industry in the US includes various types of businesses, such as grocery stores, restaurants, and bookstores, with approximately four million retail establishments across the country.

In the highly competitive US retail market, several companies stand out. Walmart, known for its low prices and extensive product selection, holds the top position among US retailers. Other prominent US retailers include Amazon, The Kroger Co., Costco, and Target.

Interestingly, many of the world's leading retailers are American companies, demonstrating their global reach. Walmart and Amazon, for instance, conduct business on a worldwide scale. Additionally, American retailers excel in online retail, with Amazon being a prime example, consistently increasing its sales revenue in recent years.

Here is a summary of the projected US retail sales figures for the coming years:

• 2020: $5.58 trillion
• 2021: $6.58 trillion
• 2022: $7.18 trillion
• 2023: $7.43 trillion
• 2024: $7.66 trillion
• 2025: $7.89 trillion
• 2026: $7.89 trillion