Retail Spending Back, But for How Long? 👗

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Retail Spending Back, But for How Long?

American retail spending surpassed pre-pandemic levels for the first time last month, but economic headwinds pose questions as to whether the trend will continue. Retail sales were 1.7% higher in July than they were in February after accounting for seasonal factors, indicating the industry has shown strong signs of recovery. 

Many people in the retail sector are concerned the speedy recovery may not last though. A significant factor in the industry’s quick return was the weekly $600 a for unemployed workers, but that Cares Act bill passed in March expired at the end of July. 

President Trump signed an executive order that replaced the payments with a $300 dollars per week benefit, but it will likely take weeks for workers to receive the rewards. 

Data suggest retail spending has already declined. Just 36% of consumers spent the same amount or more on retail purchases in the first week of August compared to the same week a year ago. That figure was as high as 57% in June. A continued decrease in retail spending would be a major setback in many parts of the market that have recovered since the initial fall at the beginning of the pandemic. 

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.

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