July 16, 2020 Reading Time: 2 minutes

Retail sales and food-services spending posted another strong gain in June, rising 7.5 percent from the prior month following an 18.2 percent record surge in May and two devastating declines in March and April. The gains likely reflected the continued easing of restrictions on many businesses across the economy. However, with new COVID-19 cases surging around much of the country, the emerging recovery is at risk from consumer retrenchment and reinstated lockdown policies.

Excluding motor vehicle and gas categories, core retail sales and food services were up 6.7 percent in June after a 12.1 percent jump in May. The gains over the past two months have almost completely offset the declines from March and April, leaving the June tally for total retail sales and food services 1.1 percent above the June 2019 level while core retail sales and food services are 1.6 percent above year ago levels (see top of first chart). The June gains put total retail sales just 0.2 percent below the eight-year trend while core retail sales are just 0.6 percent below trend (see bottom of first chart).

Gains were broad-based across industries led by a 105.1 percent surge for clothing and accessory stores, followed by a 37.4 percent leap for electronics and appliance stores, a 32.5 percent rise in furniture and home furnishings, a 26.5 percent jump in sporting-goods, hobby, musical-instrument, and bookstores, and a 20.0 percent gain for food services (see second chart).

Nonstore retail sales fell 2.4 percent for the month and along with food stores (-1.2 percent), and building materials, gardening equipment and supplies dealers (-0.3 percent), were the only major categories to show a decline for the month. Seven of the 13 spending categories in the report still show a decline from a year ago.

Retail sales rose sharply again in June as the effects of widespread quarantines and lockdowns were eased. Businesses and consumers are coming out of the policy-induced economic coma but a full return to pre-pandemic conditions is likely many months, and possibly many quarters, away though some industries and sectors of the economy will recover more quickly than others. However, threats to the recovery are rising along with the resurging spread of COVID-19.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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