skip navigation


Stay up to date on timely topics and market events. Subscribe to our Blog now.

14 May 2021

Retail Sales Confound Expectations With Slight Declines in April

By Michael J. Bazdarich, PhD

Stay up to date on timely topics and market events. Subscribe to our Blog now.

Headline retail sales were flat in April, with a slight +0.1% revision to the March estimate. For the more widely tracked “control” measure, which excludes vehicle dealers, building material stores, gas stations and restaurants, sales were down 1.5%, with a -0.2% revision to the March estimate.

In the title here, we describe that -1.5% April change in control sales as a “slight” decline because it comes off a +7.6% gain in March, not to mention a strong rebound in late-2020 from shutdown-induced declines a year ago. So, it would clearly be wrong to say April sales were weak. Nevertheless, they are clearly softer than the consensus expectations.

As described here a month ago, the consensus view was that February sales declines were due to blizzards in Texas, and that the combination of spring weather and federal stimulus checks would unleash a torrent of spending for a number of months. Our own view was that the ups and down of recent months were driven more by the vagaries of seasonal adjustment than by weather or ups and downs in the flow of federal benefits. We were also skeptical that households would spend much of the one-time windfalls doled out to them by the government.

Exhibit 1: Retail Sales Trends
Retail Sales Trends
Source: Census Bureau. As of 30 Apr 21. Select the image to expand the view.

The April sales news is consistent with our story, but is not a vindication of it. To fully confirm our story, the data in upcoming months would have to show a pullback to the trend path in place prior to the onset of the pandemic. Today’s news is a first step in that direction, but only that. Still, today’s data leaves us with less head-scratching to do than would have been the case had April sales surged again the way the consensus expected.

Underneath the headline data, most store types registered sales declines in April, following strong gains in March. Interestingly enough, sales at vehicle dealers registered an April increase, despite widespread reports of production snags on vehicle assembly lines. The 2.9% rise in car sales likely reflects higher used-car prices.

There was also a 1.0% rise in drug store sales and a 3.0% increase in restaurant sales that brought restaurants in aggregate back to within 2% of pre-Covid levels. The rebound in restaurant activity has been quite impressive, given both how many such establishments are still shuttered and also the constraints that operating restaurants have to deal with.

In sum, there is no question that consumer activity has rebounded nicely. Our question now is how much “gas is left in the tank” for further growth.

© Western Asset Management Company, LLC 2022. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission.
Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence.
Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorized and regulated by Comissão de Valores Mobiliários and Brazilian Central Bank. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000.