- January 16, 2021
- Posted by: Stratford Team
- Category: Business
US retail sales fell for the third straight month in December as the coronavirus pandemic led shoppers to pinch pennies and hunker down at home.
Retailers and food-service merchants raked in just under $541 billion last month — the lowest level since July — following decreases of 1.4 percent in November and 0.1 percent in October, the US Census Bureau said Friday.
December’s larger-than-expected 0.7 percent drop came amid a surge in COVID-19 infections and deaths that pressured retailers even at the height of the holiday shopping season. Economists were expecting sales to remain flat last month, according to Wrightson ICAP.
“The COVID-19 lockdowns have sent consumers to their homes where they sit too worried about the outlook to spend a dime at the shops and malls across the country,” said Chris Rupkey, chief financial economist at MUFG Union Bank.
December’s retail spending was 2.9 percent higher than the year-earlier month but roughly 2.1 percent below the 2020 peak of about $553 billion that was reached in September, federal data show.
The slowdown came despite an unexpectedly strong holiday season in which retailers posted $789.4 billion in sales, an 8.3 percent jump from 2019, according to the National Retail Federation.
While consumers spent more on cars, clothes and personal care products in December, online and other non-store sales sank by 5.8 percent and electronics and appliance merchants raked in 4.9 percent less, the feds said.
Restaurants and bars saw a 4.5 percent drop while sales at food and beverage stores fell by 1.4 percent — a possible sign of food insecurity among Americans who are struggling to get by during the pandemic, according to Jonathan Silver, CEO of Affinity Solutions, a global insights and marketing solutions firm.
“One of the biggest takeaways from today’s numbers is that the lower income groups who had kept the economy running until the fall have started to show spending fatigue, likely related to stalled stimulus and potential unemployment issues,” Silver said.
December’s drop came as the US economy shed jobs for the first time since April as officials imposed a new round of lockdown measures to combat the spread of COVID-19.
While the vaccines being rolled out across the country could help retailers recover in the coming months, “the pandemic has certainly altered the way we shop forever, so even when storefronts begin to open again, e-commerce will still be an essential source of revenue for retailers,” said Marwan Forzley, chief executive of the payment technology firm Veem.