In the COVID-19 era of extremes, U.S. retail sales have done more whiplashing than a sidewinder snake.
In April, retail sales plummeted by 16.4%, which was the largest one-month drop on record in U.S. history. The dive resulted from nationwide lockdowns that froze both industry and consumer spending and led to successive waves of layoffs and furloughs. More than 40 million people filed for unemployment between February and April.
But in May retail sales rebounded big. The U.S. Department of Commerce reported that sales surged 17.7% month-over-month in May 2020, representing the largest one-month gain in history (the second biggest monthly spike ever was a 6.7% surge in October 2001, a month after the 9/11 attacks).
Though total sales for the March 2020 through May 2020 period were down 10.5% from the same period a year ago, U.S. retail sales and food services for May reached an estimated $485.5 billion.
It’s clear that American consumers are ready to spend again. And the fact that COVID-19 is still raging in some states doesn’t seem to be deterring millions from shopping at brick-and-mortar stores and dining out.
Restaurants and other food retailers saw a 29.1% rebound in May as a majority of states began allowing businesses to open up outdoor patio seating, while easing restrictions for curbside pickup and the like.
While the report doesn’t break out jewelry sales specifically, sales at clothing and clothing accessories stores were up by a stunning 188% from April. The next biggest jump was in the “sporting goods, hobby, musical instrument, and book stores” category, which saw an 88.2% surge.
Economists were, across the board, shocked at the recovery. But few expect the speedy clip of spending to last (though slow-and-steady growth is a possibility).
Americans have a little extra change in their pockets right now. The $2 trillion CARES Act added $600 per week onto unemployment benefits; some American are actually making more with unemployment than they do when working at their job. But those extra benefits end in July, which will likely impact retail spending.
The Washington Post reports today that Federal Reserve Chair Jerome H. Powell warned on Tuesday that the “economic road ahead remains long and uncertain” and that “significant uncertainty remains about the timing and strength of the recovery.”
Still, good news is good news. And in this unsure moment, May’s rebound should feel like sweet (if not enduring) relief for retailers.
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