Retail Sales Spiked 17.7% In May, After Two-month Collapse

Retail sales spiked 17.7% in Mayy, rising sharply from rock-bottom levels, the first rise in sales since the coronavirus pandemic began to pummel the U.S. economy in March.

Data released Tuesday by the Commerce Department showed that retail spending began to rebound last month as parts of the country reopened their economies even as the covid-19 death toll continued to rise. The results follow two months of record-breaking declines, as Americans abruptly pulled back on discretionary spending. Retail sales fell 8.3% in March, and 14.7% in April, which is a revised figure.

Retail spending is still down nearly 8% since February, and it’s also down 6% compared to May 2019, with economists warning it could take years for retailers and shoppers to rebound from the economic devastation of the pandemic. Yet, the latest economic data has suggested a glimmer of hope.

“We’re seeing some rebound, but overall these are still historically low numbers,” said Andrew Lipsman, a retail analyst for market research firm eMarketer. “The reality is, we still have high unemployment numbers and despite the feel-good momentum of the last month, the consumer economy is still not on very strong footing.”

Consumer spending, which typically drives 70% of the nation’s economy, has dropped sharply in recent months. The pandemic has also hastened a wave of retail bankruptcies, with iconic chains such as J. Crew, Neiman Marcus and J.C. Penney filing for Chapter 11 protection in May.

Roughly 21 million Americans still remain without jobs. The official unemployment rate, at 13.3%, is higher than it was during the peak of the Great Recession. And even though U.S. employers added 2.5 million jobs in May, economists say ongoing uncertainties about the public health crisis and the economy have make it difficult to know for sure when consumers and businesses could return to levels of spending more common in the last few years.

“The numbers are improving because of staged reopenings around the country, but the economy will remain soft for some period of time,” said Brian Marks, an economist and senior lecturer at the University of New Haven. “People need to have trust, confidence and faith — both in the economy, and in monitoring and testing [of covid-19], social distancing and ultimately, a vaccine. But we’re not there yet.”

(c) 2020, The Washington Post · Abha Bhattarai 

{Matzav.com}