Retail Sales Jump 18 Percent in May
Although total retail spending is below pre-coronavirus levels, shoppers started to return to stores and increased retail sales by 17.7 percent, according to the Wall Street Journal.
The surge in retail spending is the largest ever recorded and follows the largest monthly drop ever recorded in April. The Commerce Department reported that retail sales totaled $486 million in May. For comparison, retail sales in February were $527 billion. Investors responded strongly to the data with the Dow Jones Industrial Average index opening 800 points higher Tuesday morning.
This data contributes to the growing belief that the worst of the economic fallout from the pandemic is behind us. Retailers that were significantly affected by lockdowns saw massive increases in traffic. Sales at clothing stores jumped 188 percent and sales at furniture stores increased 89.7 percent. Retail executives have been insinuating for weeks that traffic has increased at physical locations.
However, economists still believe the US economy could take years to recover and recent increases in coronavirus cases in many states might exacerbate the issue. “We still have so far to go,” said André Kurmann, associate professor of economics at Drexel University. “We are still so far below the prepandemic employment levels.” He continued, “stores can reopen to some extent, but how many people are going to come back is the big question.”
Online sales drastically increased during the coronavirus pandemic as consumers were forced to stay home. Retailers attempted to offer new services to accommodate this massive influx of shoppers, such as curbside pickup options. Nonstore retail sales, such as Amazon, increased 8.4 percent in April. Economists are also warning that a recovery in retail sales does not mean the pandemic is over.
“The labor market should keep recovering, but support from stimulus payments will fade, some states may have to pause their reopening amidst new uptrends in Covid infections, and supplemental unemployment benefits will likely be less generous after the current program expires at the end of July,” Jim O’Sullivan, chief U.S. macro strategist at TD Securities, said in a note to clients Monday.