The devil is in the details when it comes to rising retail sales
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Retail sales rose 0.6% last month, the Commerce Department says. That’s less than the previous month. Things are slowing down, and it’s another sign the economic bounceback is itself slowing down.
If you don’t have more money, you’re probably not going to spend more money.
“This all reflects the fact [that] at the end of July, the supplemental unemployment benefits were ended — the extra $600 people were getting,” said Tendayi Kapfidze, chief economist at LendingTree.
Less pandemic relief money in unemployed people’s pockets slowed down spending growth. Still, from afar, the retail segment as a whole has made a pretty strong recovery.
“Sales as of August are higher than they were heading into the pandemic in February,” said James Bohnaker, associate director with IHS Markit.
But if you look into the details, it’s chaos and carnage. Online sales are up 22% year-over-year, restaurant sales are still down 15%. Building materials up 15%, clothing’s still down 20%.
One thing that’s going on here is Americans trapped at home have moved some of their spending around.
“There is a switch from services consumption, which makes up the bulk of our consumption to goods consumption,” said Constance Hunter, chief economist at KPMG.
People might not be going to the dentist, but might buy a bike.
“It’s one of the reasons we’ve seen manufacturing rebound more than we would have normally expected in a normal recession,” Hunter said.
But as time goes on, we’re going to start going back to the dentist, and we won’t need another bike.
“It’s one of the reasons we think we’ll see a bit of a plateau in retail sales as we go into the fourth quarter, as the economy continues to open and we see people begin to purchase those services again,” Hunter said.
People will buy services at the expense of goods. One sign we’re headed there is actually buried in the restaurant data — restaurant sales growth accelerated in August. It may be a sign that people are getting more and more comfortable going out, at least for now.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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