U.S. retail sales increased 7.5% in June as stores and restaurants reopened and consumers were sent back to work. However, increases in COVID-19 cases in states followed by tightened lockdown requirements could effect spending, the Wall Street Journal reports.
What We Know:
- The June increase in retail sales (a measure of purchases at stores, restaurants and online) totaled $524.3 billion in June, up from $487.7 billion in May and nearly back to pre-pandemic levels, the Commerce Department reported Thursday.
- Spending on gasoline increased 15.3% from the prior month as commuters got back on the roads. Sales at bars and restaurants rose 20% from May, while online spending decreased 2.4% last month and sales at grocery stores dropped 1.6%.
- The Labor Department also reported that unemployment claims by laid-off workers decreased to 1.3 million for the week ending July 11, continuing the decrease from the peak of 6.9 million in March.
- Marshal Cohen, chief industry adviser at the NPD Group, Inc., a market research firm, said lower spending on experiences like concerts due to the pandemic put more money in consumers’ pockets to spend which helped drive retail-sales gains.
- States reopening plans allowed millions of people to go back to work, boosting spending at these retail locations. With a new rise in cases around the country, economists predict another decrease in spending as states implement new restrictions on indoor dining, movie theaters and other activities.
- Jobless Americans are scheduled to stop receiving $600 a week in unemployment benefits starting July 31. “On top of the health crisis, which is obviously completely unstable, there’s the economic catalyst that’s going to become ever more evident when unemployment insurance ends,” said Mark Cohen, director of retail studies at Columbia University’s Graduate School of Business.
Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output, and retail sales account for about a quarter of all consumer spending.