There has been a considerable drop in retail sales in the United States owing to the pandemic. Last year, the US retail sales witnessed a record drop of 16.4% from March to April 2020 as shutdowns were caused by the coronavirus.
According to the report submitted on retail purchases by The Commerce Department, the sales have collapsed by 21.6% in the past twelve months. This had caused millions of job loss and an unprecedented slump in consumer spending.
Things were expected to turn around with the gradual reopening of shops and businesses, but contrary to the expectations, U.S. retail sales stalled in April as the boost from stimulus checks faded. According to the monthly data released by the Census Bureau, U.S. retail sales estimate for April were $619.9 billion, which is almost the same as the previous month.
Economists find silver lining around the slowdown
Some analysts are optimistic about a turnover in the coming months due to record savings. Reports suggest that households have accumulated at least $2.3 trillion in excess savings during the pandemic, which should boost the spending this year with the reopening of the economy.
Clothing and clothing accessories stores showed the biggest slowdown, declining by 5.1% over March. However, Deborah Weinswig, chief executive officer and founder of Coresight Research, pointed out, “Despite numbers being largely flat from March, April’s sales were a positive sign for retail recovery this spring and summer.”
The base of such an optimistic outlook is the comparison with last year’s slump. April 2020 witnessed a substantial slowdown in growth which remains the lowest recorded data till now.
Compared to last year, growth has been stronger this year. During the period between February and April, total sales were up by 27.1% compared to 2020. Retail trade sales, though declining by 0.3% from March, are up by 46.1% from last year.
In total, revised retail sales for March were $619.8 billion. Added to this, strong March spending was driven by government stimulus checks. Many qualified households received additional $1,400 checks in March, which were part of the White House’s $1.9 trillion COVID-19 pandemic rescue package approved earlier that month.
A lot still depends on consumer behavior and how much they would decide to spend. Most economists are keen to believe in the silver linings because while the retail sales are not as good as expected, they are definitely not as bad as last year.
The Federal government announced that even though all the families did not receive the stimulus check, the consumer spending wasn’t set back entirely. This suggests that the economy is still self reliant and there is no point in believing otherwise.