The New York Times Company
Despite an end to the federal stimulus measures that have propped up consumer spending, retail sales climbed for the fourth straight month in August, extending a bounceback that has lasted longer than many economists had expected.
The gains, however, were smaller than in previous months, which some economists warned could be a sign that the retail recovery was running out of steam.
Retail sales rose 0.6% last month, the Commerce Department reported on Wednesday, and the 1.2% increase in July was revised down to a 0.9% gain. Still, Americans continued to spend on home computers, new cars and online groceries, and some retailers serving those pandemic-related needs reported record sales.
“The easy gains of reopening are behind us, and the downside risk of slower growth is emerging,” said Scott Anderson, an economist at the Bank of the West.
The slower rise in consumer spending in August occurred against a grim economic backdrop that grew even darker as the $600-a-week supplemental unemployment assistance expired and Congress failed to agree on new stimulus measures. Unemployment declined, but stayed high as huge sectors of the economy — like hospitality, food service and travel — remain largely shut down.
The slight monthly sales increase — many economists had been predicting a higher number — showed just how vital that government assistance has been in raising incomes. The latest sales data is likely to amplify calls for Congress to pass another round of stimulus before the November election.
“I think it will be much more difficult to see these gains going forward given that unemployment benefits have expired,” said Gus Faucher, chief economist at the PNC Financial Services Group.
The recovery continued to be strong for some retailers, while others have struggled, casting national chains into buckets of pandemic winners and losers.
Most apparel chains and department stores have seen sales tumble during the pandemic. Yet, chains like Best Buy, Dick’s Sporting Goods and West Elm have reported revenue jumps this summer, with many Americans spending more on goods that they could use at home or while socially distancing outdoors. Dick’s reported a record quarter last month, fueled by outdoor activities like golf, camping and running.
“When you look at the numbers, it was V-shaped,” Sucharita Kodali, a retail analyst at Forrester Research, said of the recovery. “It was just extremely poorly distributed across different sectors.”