THE NEUTRAL ZONE
The U.S. Commerce Department reported on Tuesday that retail sales increased by 17.7% from April to May. The surge beat the 8% increase anticipated by economists in a Dow Jones survey. President Trump celebrated the news in a tweet stating, “Wow! May retail sales show biggest one-month increase of ALL TIME, up 17.7%. Far bigger than projected. Looks like a BIG DAY FOR THE STOCK MARKET, AND JOBS!”
Economists have clarified that coronavirus-related lockdowns increased consumer spending at mostly non-local retailers. Marvin Ward Jr., local commerce research lead at the JPMorgan Chase Institute, stated, “This is good news for consumers, who can get a larger variety of goods and services at lower cost. However, it’s most likely to benefit those with higher-incomes, and local retail remains a lifeline for lower-income consumers.”
In testimony to the Senate Banking Committee on Tuesday, Federal Reserve Chairman Jerome Powell stated that some economic indicators pointed to stabilization or even “a modest rebound.” He cautioned that “levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery.” In addition, he highlighted that the “burden of the downturn has not fallen equally on all Americans,” warning that the crisis could widen the economic gaps that had previously been beginning to narrow.
Retail sales would need to increase by an additional 9% to return to pre-pandemic levels. Beth Ann Bovino, the chief U.S. economist at S&P Global, said, “I would caution not to be fooled by this large gain. We still have a long way to go in repairing the economy.”
The stunning retail-sales surge in May is great news, but don’t expect a repeat – MarketWatch – 6/16/2020. “The economy is recovering, but when you start at historic lows and you reopen, that should not surprise anyone,” said Joel Naroff of Naroff Economic Advisors. “The issue over the next two or three months will not be how big a gain we get, but how close we get to the end of 2019 levels.”
Why Good Economic News Is Now Bad Economic News – Slate Magazine – 6/16/2020. The fact that Trump is hyping them anyway points to the unfortunate reality that our president and his allies in Congress are now seizing on pretty much any encouraging short-term data as an excuse to pretend that everything is already going swell, rather than take the steps that are almost certainly necessary to set us on a path to full recovery.
The Rich Have Stopped Spending And That Has Tanked The Economy – NPR – 6/17/2020. That’s potentially crippling because consumer spending is a huge driver of economic activity. In fact, so much of the country’s economy depends on shopping by the top income bracket that the wealthiest 25% of Americans account for fully two-thirds of the total decline in spending since January.
May flowers: Where the U.S. retail blooms are and are not – Reuters – 6/17/2020. May’s sales boom owes a lot to Detroit. Sales in the automotive sector – led by car and truck dealerships – rose by more than $30 billion from April, accounting for more than 40% of the overall retail sales increase.
America just had its biggest monthly surge in retail sales. But that’s not the full story – CNN Business – 6/17/2020. Retail analysts have cautioned that the recovery could be short-lived if US consumers become less willing to spend on discretionary items like clothing, especially if there’s a second wave of the virus. Additionally, the federal government’s stimulus package and enhanced unemployment benefits of an additional $600 a week have boosted retail sales, economists say.
John Fintan Kennedy @MrJohnFKennedy on Twitter, 6/17/2020: “Retailers across the globe are all facing the same issues, the rising tide of e-commerce is hurting real-world ‘bricks and mortar’ businesses,” explained from Shane O’Sullivan #irish #startup Glimpse #retail #data #ML #software
Forrester @forrester on Twitter, 6/17/2020: Consumers are spending more time online due to the #coronavirus pandemic. How deeply this will affect #advertising depends on the timing of economic recovery.
MediaPost @MediaPost on Twitter, 6/17/2020: Amid Ecommerce Challenges, Dick’s Expands Clearance Concepts @DICKS #retail #ecommerce https://t.co/4gS4hn5bYJ @mahoney_sarah
Jodi Beggs @jodiecongirl on Twitter, 6/17/2020: there are a lot of people in cities who won’t go out and spend money unless others are wearing masks, so good luck with your economic recovery, among other things