The latest data on AEDI’s measure of Arkansas Retail Trade and Food Service Sales indicates that consumer spending remained robust in the first three months of the year. The typical seasonal slowdown in January and February was somewhat sharper than usual, so the seasonally adjusted measure of Retail Sales showed small month-to-month declines (-1.3% in January and -0.6% in February). Sales in March rebounded sharply, however, with seasonally-adjusted retail sales rising 4.6%. Year-over-year growth is somewhat distorted by events last year. In particular, severe winter weather in February 2021 interrupted an acceleration in spending that resumed the following month. If we consider quarterly averages, growth from 2021:Q1 to 2022:Q1 was 10.8%.
A comparison with U.S. data shows that Arkansas retail sales continue to trend higher than the national average. Calculating from a pre-pandemic base period of 2019:Q4, Arkansas retail sales had cumulatively risen 33.5% as of March 2022. For the U.S., the comparable calculation is an increase of 28.2%.
The table below shows year-over-year growth rates for the major categories of spending in the retail sales statistics over the past two years. Growth figures are reported for first-quarter averages. By this metric, retail sales increased 15.4% in 2021 and 10.8% in 2022. Data for the U.S. show a similar pattern, with double-digit growth in both years.
Growth rates among various sectors differed considerably, reflecting various rates of recovery from the 2020 pandemic/recession. The fastest-growth sector from 2021 to 2022 has been Gasoline Stations, with the increases driven exclusively by higher prices. (According to state gasoline tax statistics, the number of gasoline gallons sold in 2022:Q1 was down 0.1% from 2021:Q1.) Some of the slower-growing sectors (e.g. Health and Personal Care; Sporting Goods, etc.) has previously shown significant increases in 2021.
Retail Sales and Inflation
Of course, gasoline is not the only good that has been rising in price. Consumer price inflation was 8.0% from 2021:Q1 to 2022:Q1. Consequently, if we adjust total retail sales for the all-items CPI, the increase in “real” (inflation adjusted) spending over that period was approximately 2.6%. After inflation adjustment, the rising trend in spending over the second half of 2021 turns out to represent little if any real growth.
In some sectors, adjusting for inflation can have important implications for longer term trends. For example, nominal spending at Food and Beverage Stores appears to have permanently shifted higher in the post-pandemic era. After adjusting for Consumer Prices on Food at Home, grocery and liquor store sales appear to be trending back toward pre-pandemic spending patterns.
Similarly, rapidly rising prices for new and used automobiles has affected the nominal vs. real behavior of the Motor Vehicles and Parts component of retail sales. In nominal terms, this component has risen 30.0% from 2020:Q1 to 2022:Q1. The CPI for New & Used Autos, however, rose 27.1% over the same period. Consequently, real spending on motor vehicles and parts is now only slightly higher than at the start of the pandemic/recession.
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Documentation of Methodology is available here: Arkansas Retail Sales—A New Data Set from AEDI.
NOTE: As of the release of data for December 2021, the seasonal adjustment procedure has been updated from the crude regression-based approach used in earlier analyses. With data covering over four years, it is now possible to implement more sophisticated techniques. Specifically, we have implemented a version of the Census X-13 ARIMA model to seasonally adjust the data by sector.
Data for Arkansas Retail and Food Service Sales for July 2017 through March 2022 are available in an Excel Spreadsheet: Arkansas-Retail-Sales-March-2022. The data set includes statewide aggregates and components, both seasonally adjusted and not-seasonally adjusted. County-level data for Total Retail and Food Service Sales excluding Gasoline are available on a not-seasonally adjusted basis.