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U.S. retail sales rose 0.7 percent in August from July, despite the Delta virus’s surge, Forbes reported.
Sales were expected to slip 0.85 percent, according to a consensus of economists polled by FactSet.
However, more of that spending was done online and less at restaurants. Online sales bumped up 5.3 percent, month over month, while restaurant revenues were flat (see related story), although revenue at eateries has risen 32 percent in the past 12 months, The Wall Street Journal noted.
Also, consumers increased spending on goods and cut back on services, indicating caution about face-to-face contacts as the Delta virus remains unchecked.
In late July, health officials recommended that even vaccinated persons should mask in public and some retailers reimposed mask mandates for customers, possibly dissuading some consumers from visiting them.
However, department store sales gained 2.4 percent last month, mainly attributable to back-to-school shopping, Forbes said, and grocery sales also were up.
People spent less on travel and several performers canceled concerts due to the Delta virus, but those categories are not included in official measures of consumer spending.
Spending at gas stations rose only slightly, indicating that people had reduced customary travel at this time of year.
Overall spending figures also do not include sales at barber shops, hotels, gyms, or similar service venues where people encounter each other face-to-face, although sales in many of those areas have slumped or stayed flat, Forbes noted.
Auto sales fell 3.9 percent in August, the U.S. commerce department said, due largely to a shortage of computer chips and other components that continues to hamper production.
Consumers shrugged off a slight increase in applications for unemployment benefits, up 20,000 to 332,000, week over week, a gain attributable largely to Hurricane Ida’s disruption, analysts told the WSJ.
U.S. GDP will grow 5 percent this quarter, analysts at JPMorgan Chase predicted on 15 September, paring back their forecast of 7 percent earlier this summer, pointing to product shortages, particularly in the auto industry, and restricted demand due to the Delta virus’s prevalence.
TRENDPOST: As we predicted in “Consumer Sentiment Tanks” (17 Aug 2021), analysts are beginning to trim their outlook for U.S. economic expansion for the rest of this year.
Thus, the uptick in sales is seasonal and the nation will experience much softer retail numbers in the months ahead. Of course there will again be a retail sales increase when the Christmas season begins, but should equity markets dramatically drop before the holiday, it will also be felt on Main Street, as consumers hold back on spending, fearing worse times ahead.
TREND FORECAST: With the world’s economy beset by inflation, materials shortages, logistics tangles, and the ever-present Delta virus, U.S. GDP growth runs the risk of slipping below 6 percent this year, especially if the winter holiday shopping and travel season is as disappointing as it is shaping up to be.