Sales Growth Slows in August, but Recovery Continues
Kiplinger’s latest forecast on retail sales and consumer spending.
Retail and food-service sales rose a modest 0.6% in August. Continued recovery at clothing and furniture stores and restaurants was nearly offset by declines from previously elevated spending levels at grocery and sporting goods stores. E-commerce sellers and building materials stores continued their gains, each rising a small amount from an already elevated level.
Sales are now near or above pre-crisis February levels for most store categories. After consumers socked away more savings in recent months, they have cash to spend on big-ticket items such as cars and home improvement projects. They are spending more on goods right now than on services, so almost all retail sales categories are benefiting.
Sales are still 20% below pre-crisis levels for clothing stores, 16% down for restaurants, and 15% lower for department stores. Clothing and department stores typically depend on the in-store experience to boost sales. Restaurants are getting better at figuring out how to operate with health precautions, but likely will remain limited in their capacity for some time to come. Also, the arrival of colder weather will start to limit outdoor dining.
Expect goods sales to continue to do well, but there are some headwinds. Namely, the extra unemployment compensation from the Federal Emergency Management Agency will be ending in the next few weeks. However, recent reductions in COVID-19 infection rates will likely help persuade shoppers to get out more.
- 1Kiplinger’s Economic OutlooksRegularly updated insights on the economy’s next moves.
- 2GDP: -4.9% growth in 2020, 3.8% in 2021Kiplinger’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: 1.2% 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/barrel as fall arrivesKiplinger's latest forecast on the direction of energy prices
- 8HOUSING: Single-family starts down 6.6% in '20Kiplinger's latest forecast on housing starts and home sales
- 9RETAIL SALES: Ending the year 6% higher than at the start - 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.