WASHINGTON, July 16 (Xinhua) -- U.S. retail sales increased by 7.5 percent in June amid a resurgence of COVID-19 cases, following a rebound in the prior month, the country's Commerce Department reported on Thursday.
Noting that the June retail sales report was much better than expected, Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis that "in a way it's a torment because the remarkable rebound could be a fleeting one as the country struggles with a re-emergence of growth in COVID-19 cases that might force new closures."
Amid COVID-19 shutdowns, retail sales saw a revised 8.3 percent drop in March, followed by a revised record 14.7-percent drop in April. As businesses gradually reopened across the nation, retail sales increased by a revised 18.2 percent in May.
"Due to recent events surrounding COVID-19, many businesses are operating on a limited capacity or have ceased operations completely," the department said in its latest report.
Despite the rebound in May and June, total retail sales for the April through June period were down 8.1 percent from the same period a year ago, the report showed.
Retail trade sales were up 6.4 percent from May, and 5.0 percent above last year, according to the report. Non-store retailers were up 23.5 percent from June 2019, while building material and garden equipment and supplies dealers were up 17.3 percent from last year.
"While May and June figures benefitted from both low-base-effects as well as a gradual loosening of stay-at-home orders in many parts of the country, July will not have the same wind in its sails," Quinlan and Seery said.
The "easy gains" that were made possible from sharply curtailed spending have already been realized and the growth in both case counts and the positivity rate suggest that the loosening in stay-at-home orders "could be stopped or even reversed in many states," they said.
Over 20 U.S. states have already paused or partially reversed reopening efforts due to recent uptick in COVID-19 cases, raising uncertainty over the prospect of economic recovery.
According to the annual survey released Wednesday by the National Retail Federation (NRF) and Prosper Insights & Analytics, consumers tentatively plan to spend a record amount to prepare students for school and college this year as they buy more laptops and computer accessories in anticipation that at least some classes will take place online because of the pandemic.
"By any measure, this is an unprecedented year with great uncertainty, including how students will get their education this fall whether they are in kindergarten or college," NRF President and CEO Matthew Shay said.
Quinlan and Seery, pointed out two major positives for the consumer spending outlook: First, households have significantly ramped up savings during quarantine and that can fuel spending in the second half of the year; Second, there is still pent-up demand for services.
"In retail sales that pent up demand will be most evident in restaurants," they said. "But the restaurant category, even after the gain in June is still 27.7 percent below its pre-recession peak which is down more than any other category."
Patrick Harker, president of the Federal Reserve Bank of Philadelphia, said at a virtual event held by the Center City Proprietors Association on Wednesday that the path of the U.S. economy largely depends on developments involving COVID-19 as the country has failed to control the pandemic.
"A Fed president might like to think otherwise, but there is only so much policymakers can do right now to affect the economy," Harker said. "Our country's economic performance in a large part depends on what happens with COVID-19."
Latest comments