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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
Are states ready to roll out COVID-19 vaccines?
Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.
How is the service industry dealing with the return of coronavirus restrictions?
Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.
How are hospitals handling the nationwide surge in COVID-19 cases?
As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.
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