Retail sales figures are finally improving after a catastrophic drop in sales amid the coronavirus pandemic. U.S. retail and food sales spiked in May in what is now the largest single-day recovery on record. The spike, however, may not be indicative of the much-touted "V" shaped recovery sought by economists.
Retail sales began a downward trend in February, dipping 0.4%. The trend continued into March with an 8.2% decline from February, before nosediving 14.7% in April. The drop came amid the pandemic-related lockdown that saw thousands of non-essential retailers and restaurants close to help enforce social distancing measures. Unemployment skyrocketed amid the closures, with over 40 million Americans filing for unemployment.
The numbers in May, however, were a complete reversal from previous months, with a strong 17.7% surge, the single biggest single month spike in American history. Breaking down the surge to individual sectors, it's apparent that some retailers are luckier than others. Restaurants saw a 29.1% rise in May, while clothing and accessory stores were figuratively swamped with consumers, with sales figures up 188%. Hobby, sporting goods, and bookstores were up 88.2%.
The surge is not likely to last for much longer, however. Rather than being an indication of a return to the pre-pandemic status quo, the surge is most likely a result of stimulus measures. The $1,200 stimulus check, as well as the $600 per week in unemployment benefits likely account for the increase in retail sales, as it has significantly increased consumer spending power even amid the pandemic-related economic slump. As such, when the benefits run out in July, if no other measures are taken, such as the proposed "back to work bonus" or any of the other return-to-work measures proposed by lawmakers, it is likely that the retail sector may see a relapse.
Another potential threat to the surge is the still ongoing pandemic. The sooner-than-later reopening of the U.S. economy long warned against by scientists, has led to a rise in coronavirus cases in the United States. The lack of effective action by President Donald Trump and many state governments may well lead to a rapid resurgence, the long-feared "second wave" that could drive many consumers back into their homes and may cause some states to re-close.
A second shutdown would, inevitably, be worse than the first, as many companies are already struggling financially, and may not survive another months-long drop in consumer spending. Already, many companies have filed for bankruptcy or undergone drastic downsizing. In terms of damage, a prominent second wave and the subsequent shutdown would likely wreak far more havoc on the retail sector than the end of pandemic stimulus measures.
- https://www.jckonline.com/editorial-article/retail-sales-may-surged-17-7/
- https://www.businessinsider.com/us-retail-shows-signs-of-recovery-in-may-2020-6
- https://www.marketwatch.com/story/retail-sales-gains-in-may-may-fade-once-government-stimulus-money-runs-out-experts-say-2020-06-16
- https://www.forbes.com/sites/andriacheng/2020/06/16/dont-get-too-excited-about-record-may-retail-sales-just-yet/
- https://www.pws.io//white-house-considering-back-to-work-bonuses