Retail sales in the US have largely recovered from the pandemic, despite the growing number of COVID-19 cases. This is a promising sign for retailers everywhere as the holiday season approaches.
According to the US Census Bureau, overall retail sales in September of 2020 were up by 1.9 percent from the month before, and up 5.4 percent year-over-year. This is higher than what economists surveyed by Dow Jones had been expecting, more than three times higher than the 0.6 percent month-over-month increase, and nearly double the 2.8 percent year-over-year increase in August. According to the Census Bureau report, sales of clothing and accessories increased by 11 percent, while sales of books, music, and sporting goods grew by 5.7 percent.
Jack Kleinheinz, chief economist at the National Retail Federation (NRF), said the strong growth in retail sales in recent months shows how resilient consumers are, despite the disruptive pandemic environment. He added that considering all the available evidence, the US economic recovery has been progressing faster than expected.
However, Kleinhenz warned that the increasing number of COVID-19 cases remains a threat to the retail industry. The US continues to be the worst-affected country by the pandemic as of mid-November, with more than 11,600,000 cases and more than 254,000 deaths.
Kleinhenz highlighted the need for additional fiscal policy support to ensure the retail industry’s continued recovery, echoing calls made by Federal Reserve Chairman Jerome Powell in early November for more federal stimulus.
Kleinhenz’s observations regarding the US retail industry were published in the November issue of the NRF’s Monthly Economic Review.
Meanwhile, the US Department of Commerce observed that household spending on retail goods has helped increase overall consumer spending, which was down by 16.1 percent year-over-year in April and had improved by only 1.9 percent in August. Disposable personal income also increased, with an improvement of 5.4 percent year-over-year as of August, and a savings rate of 14.4 percent.
The NRF said it is still waiting for more economic data before releasing its annual holiday spending forecast. However, a survey conducted in early October by Prosper Insights & Analytics for the NRF found that consumers plan to spend an average of $997.79 on gifts. This figure is separate from anticipated expenses for other holiday items such as food, decorations, and additional non-gift purchases. Still, it is lower than the 2019 results by about $50.
According to the NRF, this drop in spending reflects consumers’ hesitation to buy holiday treats for themselves and their loved ones, despite seasonal sales and promotions.
In September of 2020, the NRF launched its “New Holiday Traditions” campaign to encourage consumers to shop safe and shop early amid the pandemic. It featured a series of ads that ran across digital and social media, radio, and connected TV from October until mid-November.