Retail: Sales Picking Up as Delta Wanes
Kiplinger’s latest forecast on retail sales and consumer spending
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Retail sales should continue doing better as the Delta surge wanes. While a still-high infection rate continued to slow restaurant traffic in September, clothing and sporting goods sales rebounded. Sales also picked up strongly in grocery, department and general merchandise stores. E-commerce continued rising to new heights. Excluding motor vehicles, total retail sales rose a robust 0.8%.
Motor vehicle sales rose for the first time in five months, an encouraging sign. There has been a shortage of new cars and trucks for sale, and manufacturers have cut production of new vehicles for lack of needed computer chips. Once this problem is resolved, auto sales will surge again.
Spending should rebound vigorously as the Delta threat subsides, particularly during October. The national peak in cases was reached on Sept. 1. Since then, the number of average daily cases has fallen by half. Retail sales excluding gasoline should rise by 18% this year. All this spending is likely to help boost yearly GDP growth to around 6%.
Child tax credit payments being sent out by the IRS should support consumer spending this year, especially ahead of the holidays. Payments will be made on the 15th of each month through the end of the year. The stimulus law raised the credit for 2021 only, and authorized the IRS to pay out half the increased credit this year, instead of having families wait to file their 2021 tax returns next year. The credit is $3,600 for each child age five and under, and $3,000 for kids ages six through 17, subject to income limits.
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