Retail sales are down for the third consecutive month

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Retail sales fell by 0.7% in December from the previous month. Economists polled by Refinitiv expected sales to remain flat. The Department of Commerce also revised The November figures fell from a decrease of 1.1% to a decrease of 1.4%.

America’s economic recovery took a hit in the closing months of 2020, and the retail industry has not been spared. Increasing Covid-19 infections and renewed lockdown measures, as well as job cuts, weighed on consumer spending and weighed on retail sales. The economy cut 140,000 jobs in December, the first drop since April.

The pandemic has forced consumers to shop more online. But even e-commerce was not spared the December dip, which fell 5.8% from the previous month. However, compared to the same period a year ago, online sales are still up by more than 19%.

Otherwise, the declines in December were broad-based: electronics and department stores saw sales decline 4.9% from the previous month, sporting goods retailers declined 0.8% and furniture and home furnishing stores recorded a 0.6% decline .

“The further decline in retail sales in December confirms that the continued increase in coronavirus infections is now weighing heavily on the economy,” Andrew Hunter, US senior economist at Capital Economics, said in a note to customers Friday.

Despite the recent downturn in consumer spending, retail sales in December were still 2.9% higher than the same time last year.

Some retailers have already reported holiday sales and results in the industry have been mixed, highlighting the wide gap between the winners and losers of the retail sector in the pandemic.

Target (TGT) said turnover grew in November and December by 17.2% compared to last year. But others struggled, such as Victoria’s Secret parent L Brands. L brands’ (LB) sales fell 7% in November and December compared to the same time last year, the company said.

The weak retail sales performance does not bode well for consumer spending, which is vital to the US economy. Economists are concerned that the weak end to 2020 will lead to a slow start to the new year. For gross domestic product – the broadest measure of economic growth – this could mean that there will be less growth in the first quarter than hoped for.

The second pandemic stimulus package signed late last month should help retail sales recover in January and throughout the first quarter of 2021, Morgan Stanley economists predicted in a research report this week. But the turn of the year alone is not enough to get people to shop and boost the economy.

The University of Michigan’s first look at consumer sentiment in January was slightly below economists’ expectations Friday morning, with the pandemic, including its impact on mental and physical health, at the top of the agenda.

However, President-elect Joe Biden’s $ 1.9 trillion stimulus plan, which includes additional direct controls for certain Americans, should also help boost spending.

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