U.S. retail sales advanced 1.2 percent in July, the third consecutive monthly rise, the U.S. Department of Commerce reported.
July sales were 1.7 percent above February’s, the month before the pandemic struck and the economy began to implode.
Spending was heavy on appliances, electronics, health products, and restaurant meals.
Last month, production at factories, mines, and utilities gained 3 percent in July, following a 5.7-percent bump in June, the U.S. Federal Reserve reported.
However, signs indicate that consumers’ spending surge might have been temporary, especially now that the $600 weekly federal unemployment has ended and $1,200 stimulus checks have been either banked or spent.
During the first week of August, just 36 percent of consumers spent the same amount or more on retail purchases than during the first week of August 2019, according to research firm GlobalData.
The retail figure is also 57 percent less than that from the last week of June this year.
Consumers also used their credit cards in stores less in late July and early August than they did a year earlier, Earnest Research said. Restaurant spending also dropped early this month, data from OpenTable shows.
“Many households are being more cautious now that enhanced unemployment benefits have dried up,” said retail analyst Neil Saunders at GlobalData.
Traffic to retail stores decreased in early July, when the last of the federal $600 stimulus checks were received, but has leveled off since then, the Jeffries Group analysis firm said.
Many households used the stimulus benefit to pay down bills and increases savings. As the economic shutdown has dragged on, some households began to spend the money on delayed major expenses such as appliances or home repairs.
Earlier this month, Donald Trump signed an executive order instating a weekly $300 unemployment benefit but that is unlikely to reach out-of-work households until some time in September.
TREND FORECAST: Any semblance of recovery has been generated by Washington pumping money into businesses big and small and unemployment benefits, which in fact, generated more income for many unemployed than they were making when they were employed.
Indeed, as Walmart Chief Financial Officer Brett Biggs said today, “Stimulus was definitely impactful to the consumer in the second quarter, and we’re watching what’s going on in Washington, and how we’re going to progress with a new stimulus package.”
When government money dries up, retail will go down.
As we had forecast when politicians began the lockdowns in March, there would be economic starts and stops and ups and downs, but the long-term trend will be sharply down as America and world sink into the “Greatest Depression.”
