Receipt-volume drift
Gas station sales grew. Gasoline volumes did not.
Last week, the August inflation report showed energy prices pulling headline CPI a full point above core. The same price move arrived Wednesday on the spending side of the ledger, and there it looked like good news.
Retail and food services sales rose 1.2 percent in August, the Census Bureau reported, after a 0.5 percent decline in July. Sales totaled 773.9 billion dollars for the month.
Gasoline stations rose 3.1 percent on the month and 21.0 percent on the year. Read as spending, that is a category in a boom.
Gasoline prices rose 27.4 percent over those same twelve months, the Bureau of Labor Statistics reported last Friday. Prices climbed faster than receipts did.
A category whose sales grow more slowly than its prices is selling less. The gap between the two runs to more than six points.
The Energy Information Administration measures volume, not receipts. Gasoline supplied to the market averaged 8.8 million barrels a day in the four weeks ending September 4, down 1.4 percent from a year earlier.
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Stations moved fewer gallons and collected more money. Both facts are true, and only one of them reaches the retail sales report.
Gasoline stations accounted for 62.3 billion dollars of the August total, or about eight percent. At 3.1 percent growth, that one line contributed roughly a quarter of a point to the 1.2 percent headline.
About a fifth of August's reported gain came from a category selling fewer units than it did a year ago. This is receipt-volume drift, where the total on the receipt and the volume in the cart pull apart.
The drift is not spread evenly across the report. Sales excluding autos and gasoline also rose 1.2 percent in August, and prices for core goods rose only 0.1 percent.
Outside the fuel line, dollars and volumes still track each other fairly closely. The distortion is concentrated in the one category where the price move was large.
None of this makes the Census number wrong. The survey counts receipts, exactly as it says it does, and it has never claimed to deflate them.
The drift appears when readers ask the series a question it was not built to answer. A report on dollars collected gets read as a report on goods bought, and usually the two move closely enough to hide the difference.
Large price moves in a single category break that habit. Energy is where that happens first, because fuel demand changes slowly when prices jump and the totals then move almost entirely on price.
The Federal Reserve lifted its target range to between 3.75 and 4.00 percent on Wednesday afternoon, citing inflation that remains elevated. The same price move that flattered the morning's spending number showed up in the afternoon's policy language as a problem.
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Where the two split
Gasoline supplied. The Energy Information Administration reports this weekly, which makes it the fastest available read on fuel volumes. A four-week average that stays below last year's level while pump prices hold would widen the drift further. (Source: U.S. Energy Information Administration)
The September gasoline index. The Bureau of Labor Statistics publishes it in mid-October, and it will show whether the price move continued past August. A second large monthly increase would repeat the same distortion in next month's sales report. (Source: Bureau of Labor Statistics)
Real goods spending. The personal income and outlays report publishes consumer spending in both current and inflation-adjusted dollars, which separates price from volume. Its August goods figure is the cleanest confirmation of whether volumes grew at all. (Source: Bureau of Economic Analysis)
There is a rule buried in this. When a category's sales grow more slowly than its prices, it is shrinking, whatever the sales line says.
Talk soon,
The Playbook Daily
