By Harriet Torry
Consumers likely boosted U.S. retail spending in August for the
fourth month in a row, but at a slower pace than earlier in the
summer as the country continued to struggle with the coronavirus
Economists surveyed by The Wall Street Journal forecast that
retail sales increased a seasonally adjusted 1.1% in August from a
month earlier. That would mark a slight cooling from the 1.2%
increase recorded in July.
Retail spending has continued to recover from the economic shock
created by the pandemic, surpassing prepandemic levels in July.
"It's going to be tough to make further gains because levels are
already pretty robust, " Stephen Stanley, chief economist at
Amherst Pierpont Securities said, referring to retail sales.
Other parts of the economy are also digging back, though at
different speeds. Industrial production increased in August for the
fourth straight month, but remains well below levels seen before
the pandemic. Employers have continued to add jobs across
industries, but there are still 11.5 million fewer jobs than in
February and the unemployment rate of 8.4% is well above the 3.5%
level from before the pandemic.
Economists say government stimulus meant to offset the
pandemic's economic damage has helped retail spending. One of those
programs -- $600-a-week in enhanced unemployment benefits for
workers -- expired at the end of July. President Trump signed an
executive action temporarily extending $300-a-week in extra aid on
top of regular state benefits.
What people were buying in August likely shifted because of
disruptions to routines from the pandemic. Back-to-school shopping,
typically a big part of August spending, is likely to look
different with many school districts teaching classes online. That
means fewer clothes and school-supplies purchases, while computers
and electronics could post gains.
Some retailers say that consumers who are still working from
home have continued spending on home improvement, including their
workspaces, and purchased big-ticket items with money saved from
not dining out or traveling.
That has been the case for Danish furniture company BoConcept,
which has seen an increase in online sales amid a drop in foot
traffic to stores due to the coronavirus. Steen Knigge, head of
U.S. marketing, said the company has benefited in part from pent-up
demand for home-office furniture.
"So far retail spending, at least in the premium furniture
segment, looks to be very strong," he said.
Customers seeking to upgrade phones and computer programs as
they work from home have driven sales at Wireless Zone, a national
wireless retailer, Executive Vice President Dave Staszewski
"Customers now are very focused on what they're looking for and
want to get in and out of the store as quickly as possible," he
said, leading to increased demand for curbside pickup and touchless
Sales at auto dealerships make up about 20% of total retail
sales, and economists expect spending on motor vehicles picked up
strongly last month. That is in part due to higher vehicle prices,
thanks to a combination of limited inventory, cheap financing and
low fuel prices that have consumers gravitating to bigger, more
expensive trucks and SUVs.
The Labor Department last week reported that prices for used
cars and trucks jumped 5.4% in August -- setting a monthly record
going back to 1969 -- compared with 0.4% for all consumer prices.
New vehicle prices were flat after a strong increase in July.
Michael Mendoza, an environmental health and safety manager in
Deerfield, Ill., recently bought a used 2018 Chevrolet Equinox SUV
because his family needed an extra car for his two daughters'
school, activities and work.
Mr. Mendoza said he wanted to take advantage of current low
interest rates, which combined with money saved by not traveling,
dining out or going to concerts due to the pandemic, meant he could
put "a nice down payment on the car."
"I do think the economy is still struggling right now,
especially in places where you can't have indoor seating" at
restaurants, the 50-year old said, adding, "I feel bad for some of
the small-business owners."
Still, he said he is seeing more traffic on the roads, and more
people at the golf course, grocery store and gas stations. "I think
people are getting back to normal," Mr. Mendoza said.
The retail-sales report doesn't track spending on most services,
such as health care and hospitality, which make up most of U.S.
Real-time data from private firms suggest that total consumer
spending is still lagging prepandemic levels because spending on
services such as dentist's visits, travel and sporting events
haven't recovered due to the continuing pandemic.
Credit- and debit-card data collected by research firm Affinity
Solutions and research group Opportunity Insights showed that
overall spending was down 7.3% at the end of August compared with
A more complete picture of household spending will come in a
separate report on spending and income on Oct. 1.
Write to Harriet Torry at firstname.lastname@example.org
(END) Dow Jones Newswires
September 16, 2020 05:44 ET (09:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.