Retails sales have jumped back to pre-pandemic levels. This is despite millions of people in America being rendered jobless in the aftermath of the COVID-19 pandemic. Data released by the Commerce Department indicates that retail sales rose 1.2% in July as a bounce back from seven-year lows in April continued to gather pace.
Retail Sales Jump
Compared to last year, sales were up 24% year-over-year on an increase in non-store retailers. Spending in garden supply retailers also had a hand in driving the overall figure higher. People also continued to spend more on grocery stores and stores that sell sporting goods, hobby supplies, and musical instruments experienced an increase in sales.
However, the retail sales figure could have been much higher. Data by the Commerce Department indicates that spending at gas stations department stores and clothing retailers is still down operating below pre-pandemic levels.
The bounce back in retail sales can be attributed to, among other things, the opening of the U.S economy. States are back in business, even as the second wave of coronavirus continues to cause havoc. The reopening has seen many businesses come back online, resulting in many people getting back to work, conversely gaining paychecks to spend.
The Unemployment benefits offered by the State and Federal government have also gone a long way in bolstering consumer spending patterns. It thus does not come as a surprise that retail sales have jumped back to their highest level on record.
The data indicates that despite a slowdown in economic activity in the coronavirus’s aftermath, consumers are still spending. However, it is clear that spending patterns have changed significantly with Brick and mortar stores feeling the changes’ full brunt.
E-commerce has grown immensely in the aftermath of the pandemic as people resort to shopping online and having items delivered at their doorsteps. E-commerce platforms such as Amazon have continued to register a booming business as people stay clear of malls owing to coronavirus fears.
Higher retail sales indicate that the U.S economy is on a recovery path after facing one of its most significant contractions in recent years. The spike in sales also suggests that people are increasingly shrugging off the pandemic, given the rising rate of new cases and death.
However, there are growing concerns that the retail sales figure could slow in August. For starters, July’s 1.2% increase fell short of Wall Street expectation of a rise in more than 8.4%. Also, the expiry of the $600 a week stimulus package in July raises prospects of spending patterns shrinking considerably.
The $600 a week enhanced unemployment benefit has so far helped millions of people rendered jobless by the pandemic stay afloat. With Democrats and Republicans struggling to reach an agreement, the likelihood of suppressed shopping patterns in August is high.
The lack of unemployment benefits could cause the economy to stall. High unemployment could slam parts of the retail industry. For starters, there is an indication that as many as 6,000 stores could close down permanently before the end of the year.