… but it really didn’t. Yes, the Census Bureau report on retail sales in June shows a 1% increase in consumer spending, but with an important caveat that the Associated Press conveniently overlooks:

Consumers picked up their spending in June from May despite surging prices in gas and food.

U.S. retail sales rose 1% last month, from a revised decline of 0.1 % in May, the Commerce Department said Friday.

Sales at furniture stores rose 1.4%, while consumer electronics stores rose 0.4%. Department stores took a hit, posting 2.6% decline. Online sales showed resurgence, posting a 2.2% increase. Business at restaurants was up 1%.

True, true, and true, and it’s also true that the June numbers reverse a sharp negative turn in May. Just how sharp that turn was is also revealed in what the AP overlooks in all of these numbers. As the Census Bureau makes very clear, these numbers are not adjusted for inflation (emphasis mine):

Advance estimates of U.S. retail and food services sales for June 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $680.6 billion, an increase of 1.0 percent (±0.5 percent) from the previous month, and 8.4 percent (±0.7 percent) above June 2021. Total sales for the April 2022 through June 2022 period were up 8.1 percent (±0.5 percent) from the same period a year ago. The April 2022 to May 2022 percent change was revised from down 0.3 percent (±0.5 percent)* to down 0.1 percent (±0.3 percent)*.

Retail trade sales were up 1.0 percent (±0.4 percent) from May 2022, and up 7.7 percent (±0.7 percent) above last year. Gasoline stations were up 49.1 percent (±1.6 percent) from June 2021, while food services and drinking places were up 13.4 percent (±3.9 percent) from last year.

Let’s put it this way: if you bought one bottle of Coca Cola for $1 in May another in June for $1.01, your consumer spending in this report would have increased by 1%. The Census Bureau would not have adjusted for that price change. You didn’t buy any more Coke than in the previous month; your spending would not have “picked up.” Not an ounce more of Coca-Cola would have been sold or consumed. It just cost more, and as a result took more of a bite out of your buying power.

So how much did prices change from May to June? According to the consumer-price index report this week, prices increased 1.3% overall from May to June, and 9.1% from June 2021 to June 2022. That means that consumer spending likely declined a little bit as it failed to keep pace with price changes on those goods and services.

Not everything failed to keep pace. For instance, furniture and bedding prices went up 1.1% in the CPI report, so an increase of 1.4% in unadjusted sales is still a bit of a gain. A gain of 2.2% in online sales is a more significant boost. But having a 0.4% gain in consumer electronics sales is clearly a step back once adjusted for inflation, and a 1% gain of restaurant sales is nearly identical to the 0.9% CPI month-on-month inflation rate for “food away from home.”

Also, under normal circumstances, an increase of 8.1% in the quarter as compared to the same quarter a year ago as noted by the Census Bureau in this report would be pretty good. However, the three monthly year-on-year inflation rates for this quarter have been all above 8.1%, and the 8.1% gain in this report is — like all of its other numbers — not adjusted for inflation. The 8.4% year-on-year growth in June failed to keep up with the year-on-year inflation of 9.1%, too.

By the way, at least in terms of Federal Reserve policy, it might be better that consumer spending remain flat or tail off. In a supply-crisis economy, the only way to curtail inflation is to dampen demand. It looks like that may already be happening, even if the Associated Press can’t recognize it.