After a March surge fueled by vaccinations and pandemic relief payments, April retail sales were flat, the U.S. Census Bureau reported Friday.
Since consumer sales are such a huge part of the economy -- 70% is a common figure given here -- and retail sales are a big chunk of that, last week's retail sales report did spark some discussion about the trajectory of the pandemic recovery.
That discussion also includes housing affordability, employee shortages affecting everything from restaurant staff to the gasoline tanker truck fleet, and a lack of microchips crippling manufacturers of technology-dependent goods, especially cars.
Inflation fears also are rising on the list. (Check out this Motley Fool take on that: "Don't Let Inflation Hype Scare You Out of the Stock Market.")
These are all pieces of the pandemic recovery puzzle, and retail sales are a particularly prominent piece for many real estate investors, since how and where people spend determines the performance of so many properties, from logistics warehouses to the corner discount store.
So, should commercial real estate investors worry about this latest retail sales report?
Retail sales were flat, but they didn't drop
Well, for one thing, sales didn't drop in April. The Census Bureau report put the figure at an estimated $619.9 billion, essentially unchanged from the $619.8 billion recorded in March. Now, March showed a 10.7% jump from February, a result of both government checks and people feeling comfortable returning to stores and restaurants.
While economists weren't predicting that kind of jump this time around, they did anticipate some gain. But jobs also were expected to be multiplying, too, and the latest monthly report showed gains fell far short of expectations there, too, further demonstrating that this recovery is happening in fits and starts.
It's also uneven. For instance, The New York Times reports that retail sales did jump by 3% from March to April at restaurants and bars but fell in other areas, such as apparel, sporting goods, and department stores.
But look back a bit further than that: April sales were up an eye-popping 700% year over year at clothing and accessories stores and nearly 200% at furniture and home furnishing stores.
In that Times piece, corporate economist Robert Frick from Navy Federal Credit Union noted: "What we need to remember is retail sales went up a crazy amount in March because of the stimulus, and it's kind of like they're stuck up there, so that's good. That means people have continued spending at that high rate."
The Millionacres bottom line: Reverting to the mean
COVID-19 brought so much to a screaming halt last year that it's natural to expect a similar trajectory forward. That's simply not going to happen. There was just too much disruption to people's lives and businesses, as well as to the supply chain integral to so much economic activity.
If what we're seeing in the retail sales is a reversion to the mean, that's not such a bad thing. After all, as The Wall Street Journal pointed out in its coverage of Friday's retail sales, in an article titled "Retail Doesn't Need Therapy": "U.S. retailers took in about as much money in April as they did in March. You should actually be impressed."