Retail sales growth in the United States unexpectedly slowed last month, raising fears that the expiration of government stimulus measures could hurt economic recovery.
Data released on Wednesday showed that overall retail sales rose only 0.6% in August from the previous month, a slowdown from a 0.9% increase in July and below expectations of consumers. economists for an increase of 1%.
Figures offer an early sign of effects on consumer spending after jobless emergency benefits expired at the end of July.
Low-income consumers “found they could no longer support their spending like they had in previous months,” said Neil Saunders, general manager of retail at consulting firm GlobalData. “Others, even in a more comfortable financial situation, became nervous about spending because the safety net of higher benefits was removed.
Commerce department data also highlighted the crisis in the hard-hit parts of the brick-and-mortar retail industry. Clothing store sales fell 20 percent from a year ago, while department store sales fell 16.9 percent.
In contrast, spending in categories such as DIY, furniture and motor vehicles was higher than a year ago. Underlying the growing popularity of online shopping during the pandemic, e-commerce sales jumped 22% from last year.
Despite the overall month-over-month slowdown, retail sales were up 2.6% from August 2019. Spending at food and beverage stores remains particularly high, up 10% year-on-year despite a 1.2% drop from July.
Retail executives observed nervously to find out how consumers react when the stimulus is withdrawn.
So-called control sales – an underlying measure that removes the most volatile items such as food, gasoline and building materials – fell 0.1% in August. It was the first drop in four months and the missed estimates for a 0.5 percent increase.
August is generally an important month for retailers given back-to-school spending, but sales only increased 2.9% month-over-month in clothing stores and fell 2.3% in department stores.
Spending at restaurants and bars grew faster, rising 4.7% from July, as parts of the country resumed eating indoors.
Separate data from Thursday also hinted at collection difficulties for some Americans. According to the National Multifamily Housing Council, 86.2% of apartments had paid full or partial rent for September by mid-month, down 2.4 percentage points from a year ago. In August, 86.9% of rent payments were made at the same time of the month.
“This is unfortunately not surprising given that Congress and the administration failed to return to the table and extend the essential protections that supported apartment residents and the country’s consumer base during the early years. pandemic month, ”said Doug Bibby, president of the NMHC.
Democrats and Republicans in Congress always seem dead end on the size and details of another stimulus package. The Senate last week rejected a Republican $ 500 billion proposal, which Democrats had called inadequate.
Economists have warned that the rebound in the US economy will stop later this year or early next year in the absence of a new round of fiscal stimulus.
President Donald Trump signed an executive order in August to provide an additional $ 300 per week to the unemployed, half of the $ 600 in federal benefits per week that expired at the end of July.
But the move was small in size compared to the legislative proposals and had limited impact. It earmarked $ 44 billion in disaster relief funds to fund additional unemployment benefits from August 8 and as of this week, only $ 12.7 billion of that money had been paid, according to the US Treasury daily release.
“The key question now is whether the sales can hold up after the benefits expire,” said Ian Shepherdson, economist at Pantheon Macroeconomics.
“The high savings rate means that an immediate collapse in sales is unlikely, but the loss of such cash flow will depress business. We believe core retail sales are on the verge of dropping outright in the fourth quarter, unless Congress acts quickly, ”he added.