Looking at inflation-adjusted retail sales

We prefer to look at the myriad of economic statistics in inflation-adjusted (real) terms to uncover what trends are. Take the FY Q1 2022 earnings reports from Home Depot and Lowe's (not shown here but trust us). If you look at their nominal sales figures they have some decent growth rates, but adjusting those for inflation shows that their gains are all because of inflation / price increases. Which means unit sales are likely flat when evaluating their performance this way.

In the graph shown here of Real Retail Sales at Building Material and Supplies Dealers, you can see that sales declined from 2006 to 2010 and then slowly started growing again, until COVID lockdowns with government injection free cash. Sales jumped to a new level and have been running at levels last seen in 2006. Nominal sales, in current $'s, looks like this channel of retailers surpassed its 2006 peak back in 2018, but that was due to inflation. Even a 2% FED-induced inflation, is going to make things look good over time.

Taking real sales by household shows, again, that households have been buying the same amount of goods but at much higher prices. COVID lockdowns and disruptions in where households could spend their money caused a jump back to levels not seen since before 2005.

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