The retail sector has been one of the worst impacted by the global pandemic. Movement restrictions reduced the footfall at shops and lack of job security saw a fall in spending, culminating in an almost 20% drop in U.S. retail sales in February 2020.
Governments have attempted to provide support in order to facilitate stimulus with checks directly to citizens’ bank accounts, furlough schemes to protect jobs and loans to small businesses to cover operational costs. The toll has been immense and it has been reflected in some of the worst economic performance figures ever recorded.
There is some light at the end of the tunnel; economic output has grown in tandem with the roll out of vaccination programs. National lockdowns have been lifted and consumer confidence has begun to return, spiking to a 16-month high in June as citizens become more optimistic about job prospects. The surge in consumer credit in May, most notably on longer-term liabilities such as student loans and automobile loans, to the tune of $26.1 billion, indicate the Americans feel that life is back to normal.
The question is; will this be reflected in retail sales numbers later today? Consumer spending makes up more than 60% of GDP in developed nations. The U.S. is a country whose success is define by consumption and citizens’ propensity to spend. Some recovery in sales is expected for June, with headline data expected to show a 0.4% rise for the month, against a contraction of 0.7% in May. Data will likely remain volatile in the coming months, as surging sales one month are offset by contractions in the next. One key takeaway remains, however; things are not back to normal yet.
ANZO CAPITAL Review
Friday, 16 Jul, 2021 / 6:01