US retail sales stagnate amid COVID-19 surge

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The recovery in US retail sales slowed last month as consumers confronted a surge in coronavirus infections and a lack of government aid to see them through the pandemic.

Retailers’ total sales rose just 0.3 percent to about $553 billion in October following September’s 1.6 percent growth, the US Census Bureau said Thursday. That fell short of economists’ expectations for a 0.5 percent jump despite marking the sixth straight monthly increase since COVID-19 gutted retailers in March and April.

The recent resurgence of the virus could pressure the industry yet again as some cities and states bring back lockdowns that kept shoppers out of stores this spring. Expanded unemployment benefits and other stimulus measures that had helped boost spending have also run dry with no new aid package insight.

“Whether this represents the start of a negative turn in consumption — either due to rising COVID cases or the potentially millions of unemployed workers reaching the end of their CARES Act savings — remains to be seen,” said Curt Long, chief economist and vice president of research at the National Association of Federally-Insured Credit Unions.

October’s total sales were 5.7 percent above where they were a year ago. But certain businesses have lagged behind — restaurant and bar sales were about 14 percent below last year’s levels, as were sales at gas stations.

Such drops are “important to take note of because they are indicative of stalls in consumer confidence in certain areas such as travel and working out of home,” said Jonathan Silver, CEO of global insights firm Affinity Solutions.

Online retailers and other “nonstore” merchants led the pack last month with a 3.1 percent increase in sales as Amazon and Target held major digital discount events. That was followed by a 1.2 percent jump at electronics and appliance shops and a 0.9 percent rise for building materials and garden supply stores.

Online sales could get another boost in November as Black Friday approaches, “especially with many retailers keeping their storefronts closed and their online channels open” amid the surge in virus cases, said Marwan Forzley, CEO of payments-processing firm Veem.

But the strength in e-commerce was offset by struggling merchants such as clothing and accessories stores, whose sales fell 4.2 percent last month, and department stores, which saw a 4.6 percent drop, federal data show.

“The coronavirus is back and it is making consumers think twice about making those shopping trips to the mall,” said Chris Rupkey, chief financial economist at MUFG Union Bank.

A Global Asset Management Seoul Korea Magazine

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