US retail sales slumped in November — the second consecutive monthly decline — as the growing number of coronavirus cases spooked shoppers across the country.
Retail sales dropped by 1.1 percent in November after slipping 0.1 percent in October, the Commerce Department said on Wednesday. The October figure was a revision from previous estimates, which had showed sales increasing.
“As COVID-19 cases have surged in the last few weeks, many retailers have felt the brunt of tighter restrictions, which have ultimately impacted sales,” said Marwan Forzley, chief executive of payment technology company, Veem.
Despite the recent slowdown in spending, November’s retail sales were still up 4.1 percent from the year-earlier month. That’s also despite soaring unemployment, hiring freezes and slowing economic growth.
The data includes car dealerships, restaurants and online spending with car sales and restaurants accounting for a bigger drag than usual as more shoppers stay put in their homes.
“The old rule of thumb for forecasters is that three consecutive months of declining retail sales means the economy is in recession and it will take a miracle to keep retail sales positive in December,” said Chris Rupkey, chief financial economist for MUFG Union bank.
Previous reports of sales increases during the holidays have mostly focused on online spending, which has surged as more consumers shop online instead of in person at shopping centers and stores.
Shoppers spent 14 percent less this year — or an average of $312 — during the five-day period from Thanksgiving to Cyber Monday — compared to last year, in part because they began purchasing earlier this year, according to the National Retail Federation.
Credit card data shows that the slowdown in spending has continued after Thanksgiving as well.
From Thanksgiving through the week of Dec. 11 credit and debit card spending declined by 4.1 percent compared to the same period a year ago, according to a Wall Street Journal report citing JPMorgan Chase & Co’s tracker of 30 million cardholders.
“Consumers are two-thirds of the economy, and if they aren’t spending, there won’t be enough growth to create the new employment opportunities that will put the millions and millions of unemployed back to work,” Rupkey added.
But not all retailers have suffered the same from this slowdown as spending at home-related and essential goods retailers including Home Depot, Costco, Walmart and Target have not sputtered.
