U.S. retail sales jumped by a record 17.7% from April to May, with spending partially rebounding after the coronavirus had shut down businesses, …
U. S. retail sales jumped by a record 17.7% from April to May, with spending partially rebounding after the coronavirus had shut down businesses, flattened the economy and paralyzed consumers during the previous two months.
The government’s report Tuesday showed that retail sales have retraced some of the record-setting month-to-month plunges of March (8.3%) and April (14.7%) as businesses have increasingly reopened. Still, the pandemic’s damage to retail sales remains severe, with purchases still down 6.1% from a year ago.
Last month’s bounce-back comes against the backdrop of an economy that may have begun what could be a slow and prolonged recovery. In May, employers added 2.5 million jobs, an unexpected increase that suggested that the job market has bottomed out. Still, a big unknown is whether early gains in job growth, retail sales and other areas can be sustained over the coming months or whether they may plateau at a low level.
“This may very well be the shortest, but still deepest, recession ever,” said Jennifer Lee, a senior economist at BMO Capital Markets. But she added that it’s “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”
May’s rebound was likely aided by the $3 trillion in rescue money that the federal government has provided to companies and households. Retail sales would need to surge by an additional 9% to return to their level before the pandemic.
Any sustained recovery, though, will hinge on an array of factors: The path of the coronavirus, how willing consumers are to shop, travel and congregate in groups, how many businesses manage to stay open and rehire many workers and whether the government provides additional support.
« While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound, » said Gus Faucher, chief economist at PNC Financial Services. “It depends on a lot of factors outside of the economics.”
The virus-induced recession not only diminished spending in most sectors of the economy.
