Northwest Arkansas Democrat-Gazette
Season’s beatings
Retail figures reflect covid-19’s cost in run-up to holidays.
U.S. retail sales dropped by more than forecast in November and the October data was revised to a decline, indicating the economic rebound is hitting bumps amid record coronavirus cases and lawmakers’ extended wrangling over a new stimulus package.
Sales fell a seasonally adjusted 1.1% in November, according to the U.S. Commerce Department. It was the biggest drop in seven months, and a steeper decline than Wall Street analysts had expected.
The report points to a weak start to the all-important holiday shopping season, which can usually account for a quarter or more of a retailer’s annual sales. It is also another sign that the pandemic is slowing the U.S. economy as retailers face tighter restrictions and people stay away from stores.
The Commerce Department on Wednesday also revised October’s report, saying that retail sales fell 0.1% that month, instead of rising 0.3% as it previously reported. Retailers had tried to get people to shop early, with Amazon, Best Buy, Walmart and others offering holiday deals in October.
Black Friday was also a bust. Typically one of the busiest shopping days of the season, shoppers mostly stayed home after health officials warned people not to shop in person, and retailers followed suit by putting their best deals online. Half as many people shopped inside stores this Black Friday than last year, according to retail data company Sensormatic Solutions.
Economists expect retail sales to fall again this month as virus cases spike and states add more restrictions.
“It will take a miracle to keep retail sales positive in December,” said Chris Rupkey, chief financial economist at global
financial group MUFG.
The figures signal that the third U.S. surge in covid-19 cases, along with the arrival of colder weather, is taking an increasing toll on the economy as governments re-impose lockdowns.
The U.S. economy has stalled after rebounding this summer after a spring shutdown. Many Americans have cut back on spending after losing a $600 weekly boost to unemployment checks that expired over the summer. Millions remain unemployed and hiring growth slowed last month.
Consumers are becoming more conservative with their finances during the wait for widespread vaccine distribution and a fresh stimulus package.
“The story is pretty simple: It’s clear the shutdown and third wave are affecting activity,” particularly at restaurants, said Brett Ryan, senior U.S. economist at Deutsche Bank. “The report highlights the need for more fiscal aid.”
The Commerce Department said sales were down sharply at all types of retailers last month, including clothing, electronic and furniture stores. The biggest drop was at department stores, down 7.7%. Restaurant sales fell 4%. Motor vehicle and parts dealers, the largest category at about a fifth of all retail sales, fell 1.7%.
The only two bright spots were online sales, which rose 0.2%, and grocery store sales, up 1.9%.
The total retail sales figure was still 4.1% above the same period last year. Illustrating the deep shifts in composition of sales, nonstore retailers were up 29.2%, while restaurant receipts plunged 17.2%.
Wednesday’s report covers only about a third of overall consumer spending. Services such as haircuts and hotel stays, which have been badly hurt by the pandemic, are not included.