September 16, 2020 | 08:58
"Can I help you? No, thank you, just looking."
"I need to take a break ... gotta breathe a little .... "
Let's step back and review .... U.S. retail sales plunged over 20% during the pandemic, then surged in the month that the country reopened. But consumers cannot keep such a pace going... +18.3% in May, +9.6% in June, +0.9% in July (revised from +1.2%), and now, just +0.6% in August. Indeed, the latest month was about half of what consensus was expecting but the details didn't exactly send up any flare guns: areas where consumers might cut back if they were extremely worried were still up solidly, including food services & drinking places (+4.7%), even with the social distancing measures put in place, building materials & gardening equipment (if you're working from home and staring out the window during a Zoom call, you might as well have a nice backyard to gaze at), autos (+4.5%) and gasoline stations (+0.4%). A bit disconcerting was the second straight drop in sporting goods/book stores (-5.7%).
So the gains are clearly slowing, but they’re still not bad given the hurdles that retailers faced in the month, particularly as UI benefits were scaled back. But the 0.6% increase in core sales (which include food but strip out cars, gas stations and building materials) was the fourth straight gain, and still points to a solid rise in real personal spending, as long as job creation continues.
One thing to keep in mind.... there was an interesting comment from one of the ISM survey respondents recently, warning that although e-commerce sales were up significantly, which offset the drop in foot traffic at the brick & mortar stores, sales are starting to level out.
Bottom Line: The recovery is still on track.... it is swaying a little, from left to right, but it is still on track.
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