Retail Sales Surge, but Stay Lopsided
Kiplinger’s latest forecast on retail sales and consumer spending.
Retail and food service sales surged 17.7% in May, as many states started reopening their economies. The largest jumps were seen at clothing stores (188%), furniture stores (90%), electronics/appliance stores (50%), auto dealers (44%) and restaurants (29%). While the surge is real, the percentages are inflated because they are starting from a small base. We expect that June sales will show a good pickup as well.
But sales are lopsided and still below pre-crisis levels in most categories. Clothing stores are still at only 37% of their normal, restaurants are at 60%, and most specialized retail is at 75%. There are some categories that have done well because of people staying at home: E-commerce is 25% above normal; grocery stores, 13%; sports and fitness equipment sellers, 3%.
What’s surprising is that auto sales have picked up vigorously, along with things like building materials for home improvement projects. People who had to stay home built up their cash savings, if they were able to hang on to their jobs. There were fewer opportunities to spend, and many people received government stimulus checks. Folks are now using these reserves for major purchases, similar to the spending spree that takes place during tax refund season.
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: 0.3% by the end of '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 barrel in coming weeksKiplinger'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.