Retail Sales Surge Again
Kiplinger’s latest forecast on retail sales and consumer spending.
Retail and food service sales surged for a second month, up 7.5% in June after an 18.2% jump in May, as many states came close to fully reopening their economies. The largest sales increases were seen in clothing (105%), electronics and appliances (37%), furniture (32%), sporting goods (27%), department-store sales (20%) and restaurant sales (20%). While the surge is real, the percentages are misleading because they are starting from a small base.
Sales rose above pre-crisis February levels for autos, building materials, groceries, sporting goods and e-commerce items. After socking away more savings in recent months, consumers have cash to spend on big-ticket items such as cars and home improvement projects. Consumers are spending more on goods right now than services, so almost all retail sales categories are benefitting. Folks who are staying home instead of going out are buying groceries and sporting goods equipment instead of going to restaurants or gyms. E-commerce sales ebbed by 2% in June as stores reopened, but online purchases should stay at elevated levels for a while, around 20% above normal.
Sales are still below pre-crisis levels for most other spending categories, especially clothing and restaurants. Clothing stores’ sales are still 23% below normal; restaurants are off by 27%. Sales that depend on the in-store experience, such as clothing, will likely be the last to catch up.
Expect goods sales to continue to do well, but there are some clouds ahead. Expanded unemployment payments are set to expire at the end of July. So households with still-unemployed members could see a significant drop in income.
- 1Kiplinger’s Economic OutlooksRegularly updated insights on the economy’s next moves.
- 2GDP: -5.8% growth in 2020, down from 2.3% in 2019Kiplinger’s latest forecast for the GDP growth rate
- 3JOBS: States are reopening, but workers will come back slowlyKiplinger’s latest forecast on jobs
- 4INTEREST RATES: 10-year T-notes staying below 1.0% for a whileKiplinger’s latest forecast on interest rates
- 5INFLATION: 0.6% through '20, from 2.3% at end '19Kiplinger’s latest forecast on inflation
- 6BUSINESS SPENDING: Down 10% to 20% in '20Kiplinger’s latest forecast on business equipment spending
- 7ENERGY: Crude oil trading from $35 to $40 per barrelKiplinger's latest forecast on the direction of energy prices
- 8HOUSING: Total starts down 6.6% in '20Kiplinger's latest forecast on housing starts and home sales
- 9RETAIL SALES: E-commerce surge will endure - currently readingKiplinger’s latest forecast on retail sales and consumer spending.
- 10TRADE DEFICIT: Widening 3% in ’20Kiplinger's latest forecast on the direction of the trade deficit.