Retail Slowdown
Before the pandemic, retail sales were moving slowly along with the economy, with slight movements and low volatility in terms of the numbers. However, a lot of things were different before the pandemic, and the same can be said for this too. When the recession hit, retail sales fell nearly 20 percent due to the sudden shock the pandemic created, and when the following months ensued, retail sales returned to pre-pandemic levels and continued higher. It declined a bit during the winter when the third wave occurred, but then it witnessed a meteoric rise as the United States removed most COVID restrictions and people were getting vaccinated, which led them to spend more. That brings us to today, where consumers are spending money on flights, vacations, services, and goods, which is benefitting hard-hit industries.
Unfortunately, these numbers rely on our progress with the virus, and progress has been lost. This was confirmed on Tuesday as the Commerce Department reported that U.S. retail sales fell by 1.1 percent in July as there was a pullback in consumer demand. The reason why? The Delta variant, which has caused the number of infections in the US to increase exponentially and restrictions to be put in place. This, once again, has hurt the at-risk industries the most, though we had some surprises such as the amount of consumer spending for restaurants rising. Still, economists believe that the consumer mentality is to move on with our pre-pandemic lives as the restrictions aren’t that harsh now, though this will likely occur slowly. Some sectors reacted negatively to the news along with the overall market, but this could be a short-term buffer. What do you think about the retail data?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
