Popular Economics Weekly
“Advance estimates of U.S. retail and food services sales for June 2021, adjusted for seasonal variation and holiday and trading-day differences, according to the US Census Bureau, but not for price changes, were $621.3 billion, an increase of 0.6 percent from the previous month, and 18.0 percent above June 2020.”
Consumers have been spending like there’s no tomorrow since January, but how long can that continue with the coronavirus Delta variant causing infection rates to soar among the unvaccinated?
Retail sales should continue to decline from current nosebleed levels, since surveys show that consumers are most worried about a COVID-19 resurgence.
The CDC reports that “the current 7-day moving average of daily new cases (26,306) increased 69.3% compared with the previous 7-day moving average (15,541). The current 7-day moving average is 89.6% lower than the peak observed on January 10, 2021 (251,880) and is 129.3% higher than the lowest value observed on June 20, 2021 (11,472). A total of 33,797,400 COVID-19 cases have been reported as of July 14.”
Households are still buying plenty of goods, but they have shifted their spending toward services they avoided during the pandemic, “dining out, entertainment, travel, vacation trips and so forth,” reported MarketWatch.
And this is where any future super-spreader events will occur. That is why the US Surgeon General is saying masks should again be worn in crowded indoor locations with poor ventilation—such as bars and restaurants. This will certainly cause consumers to take notice.
Take bars and restaurants, the only category in the monthly retail report that involves services. Sales jumped 2.3 percent in June, the government said Friday, and rose sharply for the fourth month in a row. And through the first six months of 2021 receipts are up almost 38 percent.
We know consumers also would have bought more new cars and trucks last month, but automakers cannot produce enough of them because of a shortage of computer chips. Semiconductors are now a critical component in modern vehicles.
Another hit to higher retail sales could be a reluctance for more workers to return to work. I reported last week that the job-listing site Indeed did a 5,000 person survey that gave an additional reason why workers are reluctant to return to work.
“Among the unemployed, concern about COVID-19 is the most commonly cited reason for a lack of urgency in looking for work,” wrote Nick Bunker, the economic research director for North America at the Indeed Hiring Lab, in a blog post on the survey results. Some 23% of unemployed people said fear of the virus was keeping their job search “non-urgent.”
So it may be that retail sales return to the five percent average that has prevailed since the early 1990s (see Calculated Risk graph), as the pandemic stimulus payments subside.
Retail sales comprise roughly 50 percent of consumer spending, so its trend may mirror how long this post-pandemic prosperity will last, which in turn depend on how quickly product shortages end, and future job prospects in an economy that is vastly changed since January of last year.
Harlan Green © 2021
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