Retail sales are down for the third month in a row

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Retail sales fell 0.7% in December from the previous month. Economists surveyed by Refinitiv expected sales to be flat. The Commerce Department also reviewed November data falls from a 1.1% drop to a 1.4% drop.

America’s economic recovery was successful in the last months of 2020, and the retail sector was not spared. The increase in Covid-19 infections and renewed blockade measures, as well as job losses, have affected consumer spending and been a barrier to retail sales. The economy lost 140,000 jobs in December, the first decline since April.

The pandemic has forced consumers to buy more online. But not even e-commerce was spared the decline in December, down 5.8% from the previous month. Compared to the same period a year ago, however, online sales continue to grow by over 19%.

Otherwise, the declines in December were broad-based: electronics and home appliance stores were down 4.9% on the previous month, sporting goods retailers were down 0.8%, and retail stores were down. furniture and home furniture declined by 0.6%.

“The further decline in retail sales in December confirms that the continuing rise in coronavirus infections now weighs heavily on the economy,” Andrew Hunter, a senior US economist at Capital Economics, said in a note to clients on Friday.

Despite the recent decline in consumer spending, retail sales rose another 2.9% in December from the same period last year.

Some retailers have already reported holiday sales, and results in this sector have been mixed, highlighting the big difference between retail winners and those who lost in the pandemic.

Aim (TGT) said sales rose 17.2% in November and December compared to last year. But others have struggled, such as Father Victoria’s Secret L Brands. L marks (pounds) sales fell 7% in November and December compared to the same period last year, the company said.

The poor performance of retail sales does not bode well for consumer spending, which is vital to the US economy. Economists are worried that the weak end of 2020 will make a slow start to the new year. For gross domestic product – the broadest measure of economic growth – this could mean lower-than-expected growth in the first quarter.

The second pandemic stimulus package signed late last month should help restore retail sales in January and the first quarter of 2021, economists at Morgan Stanley projected in a research report this week. But the beginning of the year alone will not be enough to make people shop and stimulate the economy.

The University of Michigan’s first look at consumer sentiment in January was slightly below economists’ expectations on Friday morning, and the pandemic, including its repercussions on mental and physical health, was top notch.

However, President-elect Joe Biden’s $ 1.9 trillion incentive plan, which includes additional direct controls for some Americans, should also help increase spending.

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