We noted last week that retail sales in Alberta have been on a flattish trend and our current forecast for retail spending growth this year is just 0.7%.

But retail sales is a broad category, so it is useful to also look at which components of spending are up and which are down.

Comparing year-to-date (YTD) sales in Alberta from January to August (latest data available) in 2023 and 2024, we find that there has been a clear pullback in spending on durable and semi-durable goods.

Vehicle sales (the largest component of the durable goods category) were down by 3.4%, shaving 0.8 points off of total sales growth (see the chart below).

Zeroing-in on core* sales in Alberta, we find that the only source of growth so far this year is the non-durable goods and services category (see the chart below).

This makes intuitive sense when we consider that non-durable goods and services are less sensitive** (though not immune) to elevated interest rates while spending on durable and semi-durable goods have likely been feeling the weight of increased borrowing costs more acutely as time has gone by.

With interest rates coming down, we expect spending on durables and semi-durables to recover, but it will take some time for the full impact of lower rates to be felt.

Our current forecast is for Alberta retail sales to expand by 3.7% next year versus just 0.7% growth expected this year.  

*Core sales excludes vehicle and part dealers; gasoline stations.

**See Chart 15 in the Bank of Canada’s October 2022 Monetary Policy Report.

Answer to the previous trivia question: You need at least 270 electoral college votes to win the U.S. presidency.

Today’s trivia question: Not including the one next week, how many U.S. presidential elections have there been?