The roller-coaster car that is U.S. retailing is currently clicking upwards. But is a there another precipitous drop ahead?
In April, retail sales set a new record for the largest monthly drop ever in the United States. Then they spiked an unprecedented 17.7% in May—breaking the record for the largest one-month gain in history. And now the U.S. Department of Commerce has announced that retail sales increased more than 7.5% in June from the previous month.
What’s coming next? It may depend largely on how the COVID-19 pandemic spreads or is contained in the coming weeks. The pandemic has impacted the health of retail sales significantly since it began its spread in the states earlier this year. Where the pandemic’s been better contained, in states including Maine and New York, retail sales have rebounded more robustly.
Following April’s big dive, the retail recovery was going somewhat smoothly until mid-June, when COVID-19 cases began to spike nationally following the reopening of many U.S. states. Infection numbers are currently breaking new records almost daily in states such as Florida and Arizona. Florida alone has more COVID-19 cases than any single country in the world. And the total death rate in the United States is among the worst of any country in the world, according to the New York Times, though the virus has still been deadlier in many European countries than it has been in the United States.
The pandemic continues to intimately affect U.S. retailing. Credit card analytics company Commerce Signals sent an email to JCK Friday with insights culled from 40 million credit card users that showed spending had nearly reached year-ago levels the week of June 14 but declined significantly the following week as COVID-19 infections rose. Spending was up again the week of June 28 but still trailed last year. For California, Arizona, Texas, and Florida, consumer purchases during the last four weeks were down 12.7% compared to last year.
Online retailing is faring better than brick-and-mortar: According to Commerce Signals data, online retail sales are up 55%, but in-store sales are down 2.1% compared to last year.
Commerce Signals asserted that, “Surging cases and and possible renewed restrictions will be barriers to further recovery.”
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