Some Clarity on the December Retail Trade Report

 ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES, December 2022 

Advance estimates of U.S. retail and food services sales for December 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $677.1 billion, down 1.1 percent (±0.5 percent) from the previous month, but up 6.0 percent (±0.7 percent) above December 2021. Total sales for the 12 months of 2022 were up 9.2 percent (±0.4 percent) from 2021. Total sales for the October 2022 through December 2022 period were up 6.7 percent (±0.5 percent) from the same period a year ago. The October 2022 to November 2022 percent change was revised from down 0.6 percent (±0.5 percent) to down 1.0 percent (±0.2 percent).

The data is not inflation adjusted. The data in this graph is...

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The blue dots represents what we have spent in current dollars, and the orange represents the quantity of stuff we have bought. This clearly represents the when... for ramp up of inflation. 

It should be noted the December of 2022 decline is similar to the December of 2021 decline. 

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Putting it another way, this report indicates that total sales in current dollars, has fallen back to May, 2022 levels, while Quantity bought is back to August 2021 levels.

Or a third way, is to note...

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Retail sales have been fairly flat, the past year, when adjusted for inflation. It would also be reflected in the drop off in trade deficit, which indicates the supply chain is nearly healed. 

Some food for thought. Initially, inflation was blamed on supply chain issues rather than monetary/fiscal policy, AND would thereby be transitory. That theory would indicate prices falling back to pre-supply chain problems. 

Those prices have become sticky and show no signs of falling back to pre-supply chain levels. Thus monetary/fiscal policy should be the focus.

In fairness, I believe the FED has been forced to address the Fiscal failings, by using implementing monetary policy. Although, whether fiscal or monetary, it is the same sorry bunch, imho.

Don't be fooled by last month's data, as core PCE has become quite sticky in the 0.35%~0.4% monthly range, which is still twice what the FED wants.. Also, the PPI fell more than expected, but you would have thought the magic number has finally arrived. 6.2% year over year is not magical, imho.