Growth in retail sales is slowing. That’s a bad sign for the economy
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It is a truism that we repeat time and again on this program: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy.
Consumer sentiment so far in November is down more than 5% from October and is some 20% below where it was this time last year.
New numbers on retail sales were released Tuesday. Sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s.
If you have anything to do with the retail business, something you don’t want to see is this kind of falloff in sales growth in the fall.
“October’s report is actually a bad omen for the holiday season,” said Camilla Yanushevsky, a retail analyst at CFRA Research. She predicts this’ll be the first year since 2008 that annual holiday sales don’t go up.
John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.
“When you see the number of new cases spiking as it is currently, we see consumer confidence in the U.S. decrease,” he said.
This is not an equal opportunity retail slowdown, though, said Nick Shields, an analyst at Third Bridge. “Main Street retail is weaker than big-box retail,” Shields said, and smaller retailers have a harder time dealing with COVID-19 restrictions and transitioning to online shopping.
If more of them shut down, it’ll hurt the entire economy, he said. Big brands will have fewer consumer outlets, and commercial landlords will take a hit.
“They do serve a lot of massive retailers like the department stores, like Walmart, like Target. But they also have small-business and medium-sized retailers,” Shields said.
We probably won’t know until early next year — after the holiday shopping results are in — how many smaller retailers are going to throw in the towel and shut down for good, he said.
COVID-19 Economy FAQs
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.
Give me a snapshot of the labor market in the U.S.
U.S. job openings in February increased more than expected, according to the Labor Department. Also, the economy added over 900,000 jobs in March. For all of the good jobs news recently, there are still nearly 10 million people who are out of work, and more than 4 million of them have been unemployed for six months or longer. “So we still have a very long way to go until we get a full recovery,” said Elise Gould with the Economic Policy Institute. She said the industries that have the furthest to go are the ones you’d expect: “leisure and hospitality, accommodations, food services, restaurants” and the public sector, especially in education.
What do I need to know about tax season this year?
Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.
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