Retail sales fell 1.1 percent in November as COVID-19 surge slowed spending

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Retail sales fell by 1.1 percent in November as surging coronavirus cases across the U.S. prompted a pullback in consumer spending and a new wave of restrictions, according to data released Wednesday by the Census Bureau.

Sales by retailers in every sector but grocery stores, hardware and home supply, and e-commerce fell in November as the U.S. saw COVID-19 cases, hospitalizations and deaths shatter records.

Clothing and clothing accessory stores took the hardest hit in November as sales declined 6.8 percent from the previous month and 16.1 percent from November 2019. Sales at restaurants and bars fell 4 percent from October and were down 17.2 percent from a year ago, electronics and appliance stores saw a 3.5 percent monthly decline and gas stations saw sales drop by 2.4 percent in a month.

“Empty department stores, reduced driving, and fewer diners at restaurants also restrained retail sales. Modest online shopping, more groceries and building equipment purchases only partially offset the weakness in other sectors,” wrote Gregory Daco, chief U.S. economist at Oxford Economics, in a Wednesday analysis.

The drop in retail sales is the latest sign that the recovery from the coronavirus recession is slowing under pressure from the uncontrolled pandemic and dwindling federal aid. Economists have warned for months that the skyrocketing rate of coronavirus infections and colder weather could prompt another decline in growth and employment without further rescue spending from Congress.

Democratic and Republican congressional leaders said Tuesday night that they’re close to an agreement on a coronavirus relief and government spending deal. While the size and scope of the deal is not final, it is expected to include another round of Paycheck Protection Program loans to small businesses, enhanced unemployment benefits, funding for schools and vaccine distribution and other uncontroversial proposals. 

Negotiators are facing pressure from Democrats to include funding for state and local governments, a push from Republicans to give businesses broad liability protections against coronavirus-related claims, and bipartisan calls for a second round of direct stimulus payments to most U.S. households.  

Without another deal, millions of Americans are set to lose their unemployment benefits and may be evicted or foreclosed on when federal protections expire on Dec. 31. Unemployment experts say that Congress can no longer avoid a brief lapse in benefits, but can still act quickly enough to prevent desperate Americans from making dangerous decisions in the face of financial peril.

“Elevated savings and steady employment for median- to high-income families should translate into a strong consumer spending rebound as pent-up demand is released from Q2 onward. However, many families could emerge with deep scars and an inability to spend,” Daco said.

Tags CARES Act coronavirus recession Retail sales

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