Drops in November and October raise questions about how retailers are faring in the all-important holiday shopping season.
Consumer spending has been one of the few bright spots in the pandemic-battered economy. Since the spring, Americans have spent more each month even in the face of mounting job losses, political turmoil and recurring virus outbreaks. But that streak is over now. U.S. retail sales declined last month and in October, raising questions about how retailers are faring in the all-important holiday shopping season and about the stability of the broader economy. Sales fell 1.1 percent in November — more than economists had predicted — as spending on categories like automobiles, electronic stores, clothing and restaurants and bars softened, according to a report from the Commerce Department on Wednesday. The Commerce Department also revised its tally for October to a 0.1 percent decline, from an increase of 0.3 percent that had been reported last month. Economists said the declines were “warning signs” that the economy was entering a rough patch and in need of a jolt from another round of government stimulus. “When the U.S. consumer fails to spend, the world’s economy feels it,” said Beth Ann Bovino, chief U.S. economist at S&P Global. The November slide, in particular, adds new urgency to this week’s discussion on Capitol Hill over a stimulus package. On Wednesday, top Democrats and Republicans were said to be nearing a $900 billion deal that would expand unemployment benefits and provide new stimulus checks to consumers. Consumer spending accounts for roughly 70 percent of total economic growth, so propping up retail sales is central to any plans to stoke a recovery. And economists have been warning that failure to enact more financial support for the unemployed would eventually jeopardize the progress made in reviving the economy. “Weak retail sales in the fall, along with a recent increase in unemployment insurance claims, are warning signs for the economy at the end of 2020,” Gus Faucher, chief economist at PNC Financial Services Group, said in a research note.
