Retail sales strong going into holidays
According to a recent report from the National Retail Federation (NRF), U.S. retail sales have largely recovered from the impact of the Covid-19 pandemic, a promising sign for the holiday shopping season.
NRF highlighted that retail sales have been increasing both month-over-month and year-over-year since June and have completed a V-shaped recovery. Since January, retail sales have increased 8.6% according to data from Harvard University’s Opportunity Insights research project, cited by NRF.
“Strong growth in retail sales during the last few months points to the resiliency of consumers even in this disruptive pandemic environment,” said NRF’s chief economist, Jack Kleinhenz, in a release. “Taking in all the evidence available, the U.S. economic recovery has progressed more quickly than generally expected.”
An increase in personal disposable income, which was up 5.4% year-over-year as of August, was highlighted as one of the reasons behind this consumer resiliency. On top of this, the current savings rate of 14.4% has remained in double digits for six straight months.
According to NRF, consumer confidence is rising, although it is still below pre-Covid-19 levels.
Spending on retail goods has been an important part of the recovery of overall consumer spending, which was down 16.1% year-over-year in April, but only 1.9% as of August.
Nonetheless, NRF pointed out the growing number of coronavirus cases in the U.S. as a continued threat to a successful retail recovery. Kleinhenz also emphasized that additional federal stimulus may be necessary.
“While there might be sufficient momentum and resiliency to propel the economy in the months ahead, additional fiscal policy support is critical to ensure that the recovery doesn’t stall,” he explained.
NRF has not yet released its annual holiday spending forecast, as it is waiting for additional economic data. However, the organization recently published a study in collaboration with Prosper Insights & Analytics, which revealed that consumers plan to spend an average of $997.79 this holiday season, representing a decrease of around $50 from last year.
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