Retail Sales are the total amount of merchandise and related services sold to consumers. It is considered a sign of strength of U.S. Consumer spending, which accounts for roughly two-thirds of the economy. This indicator also provides insight into which areas of the retail space are experiencing strong sales. Food was excluded in the Retail Sales TTM chart above because of its volatility relative to other retail categories.
After posting its largest monthly increase ever recorded, retail sales in the US continued to climb and rose by another 7.50% in the month of June. The two areas that had the most prominent impact on the overall rise in retail sales this month were clothing & clothing accessories stores and electronics and appliance stores. Sales in clothing and clothing accessories stores rose by 105.1% while sales in electronics and appliance stores posted an increase of 37.4%. Both sectors experienced significant gains over the last month as consumer spending spiked and demand for goods and services rose in nearly every category of retail sales.
The US economy witnessed an increase in retail sales that was slightly unexpected this month. Forecasts called for retail sales to advance only 5% in June, but it is evident that the jump in consumer spending and economic activity boosted this percentage significantly. With nearly every category of sales rising this past month, it is no surprise that total retail sales for the month of June registered 2.5% higher than its predicted value. Besides clothing and electronics stores, other areas that contributed to the rise in total retail sales were furniture sales (+32.5%), sporting goods sales (+26.5%), and sales in motor vehicle and auto parts stores (+8.2%). Electronics and appliance sales without a doubt had the greatest impact on overall retail sales this month. Stemming from expectations of online classes and virtual education, electronics sales have skyrocketed as individuals adapt and adjust to this new means of learning. It is expected that consumers in the US will spend over $101 billion on back-to-school and back-to-college supplies this year considering these new means of education. As students head back to school this fall, it is expected that retail sales levels will continue to rise each month but may be impacted by Covid-19 infection rates should another outbreak occur.
In light of the budding economic recovery, the increase in total retail sales this month is in an indicator that the economy is progressing in the right direction. However, worries about the Covid-19 virus remain in circulation as infection rates have started to increase in specific parts of the country. Right now, consumer and retail spending are fueling the economy as individuals spend money received from government relief packages. While consumer spending is the backbone to the US economy and is proving stable right now, this also raises concerns about the future stability of the economy should infection rates continue to rise across the country. It total, it is predicted that retail sales in all areas will continue to rise next month, but this heavily depends on the Covid-19 situation and how it is impacting the economy and consumer behavior.
July 16, 2020