“While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound. It depends on a lot of factors outside of the economics.”
recovery. In May, employers added 2.5 million jobs, an unexpected rise that suggested that the job market has bottomed out. Still, a big unknown is whether early gains in job growth, retail sales and other areas can be sustained in the coming months or whether they may plateau at a low level.
“This may very well be the shortest, but still deepest, recession ever,” said Jennifer Lee, a senior economist at BMO Capital Markets. But she added that it’s “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”
The return of shoppers last month was likely aided by the $3 trillion in rescue money that the federal government has provided to companies and households. Americans’ retail purchases would need to surge by an additional 9% to return to their level before the pandemic.
Any sustained recovery, though, will hinge on an array of factors: The path of the coronavirus, how willing people are to shop, travel and congregate in groups, how many businesses manage to stay open and rehire many workers and whether the government provides additional support.
“While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound,” said Gus Faucher, chief economist at PNC Financial Services. “It depends on a lot of factors outside of the economics.”
The virus-induced recession not only diminished spending in most sectors of the economy. It has also accelerated shifts in where people shop and what they buy. The changes forced by the coronavirus have aided online retailers and building materials stores and other outlets that stayed open during the outbreak. Other businesses are facing persistent financial strains.
Extending an ongoing shift in shopping habits, Americans last month stepped up their purchases at non-store retailers, which include internet companies like Amazon and eBay, by 9% after boosting such purchases nearly 10% in April. This category of sales is up a sizable 31% from a year ago.
When consumers do make purchases at physical stores, they’re increasingly doing so for such items as buildings