Retail sales increased in August from the previous month but at a slower pace after the enhanced unemployment benefits provided by the federal government ended.
The US Commerce Department reported on Wednesday that US retail sales rose 0.6% in August. That’s less than the 1% that economists surveyed in Refinitv had forecast. The Commerce Department said in July, retail sales grew 0.9%. This gain was already much slower than the 8.4% gain in June.
The $ 600 weekly unemployment supplement, which was part of the government’s first stimulus, ran out at the end of July. Since then, Congress has been unable to agree on another batch of unemployment benefits. President Trump signed an Executive Order to boost benefits again, albeit with less money, by transferring money from the Federal Emergency Management Agency.
Consumer spending is the largest driver of economic growth in the US, and retail sales are an important component of that. But the Commerce Department report does not include spending on services – things like hair cutting, medical care, and financial services.
Some economists say the continued growth in retail sales depends on future government stimulus money and relief for people who have lost their jobs.
Partial setback [in retail sales] Possibly over the next two months as people receiving enhanced unemployment benefits … cut back their spending, “Ian Shepherdson, an economist at Pantheon Macro Economics, said in a research report Tuesday. Income affected by cut benefits. Too big for people to ignore. ”
Some basic information: Retail sales fell to a seven-year low in April, as the coronavirus forced stores across the country to close their doors. Sales rebounded back to pre-pandemic levels in July.
Although retail sales recovered, spending did not go to all retailers equal.
So far in 2020, nearly 8,000 stores have said they will close permanently, according to Coresight Research, a retail research and advisory firm. It expects shutdowns to set a new annual record this year with as many as 25,000, beating last year’s record of 9,302 closures the company tracks.