November Retail Sales: A “Troubling” but Not Surprising Decline

By at 16 December, 2020, 11:18 am

by Raymond J. Keating-

The latest report on retail sales didn’t offer much Christmas cheer. Retail and food services sales declined by 1.1 percent in November, and that came after a revised decline of 0.1 percent in October.

Compared to a year earlier, November 2020 retail sales were by 4.1 percent, with nonstore retail (mainly, ecommerce) leading the way, up by 29.2 percent, and food services and drinking places suffering, down by 17.2 percent. That, of course, is not surprising given the toll that the pandemic and related shutdowns have had on restaurants, and the dramatic move to online shopping.

The shift down by the consumer overall is troubling but not surprising.

As noted in the following chart, retail sales were not exactly robust in late 2019 and very early 2020. When the pandemic struck, sales plummeted in March and April, but then made a strong recovery during May, June, July, August and September. However, much of that seemed to be supported by government aid, along with a partial economic recovery.

Source: Federal Reserve Bank of St. Louis, FRED

Consumers, as I have noted many times before, are followers, taking their cues from entrepreneurs, businesses and investors. If business and investment is rocking and rolling, then so are consumers. But since business, in particular, small business, has been suffering in this pandemic economy, the consumer is not exactly going to be spending freely.

With vaccines and therapeutics arriving to deal with the coronavirus, there is increased hope – a light can be seen at the end of the tunnel. However, there remains rough terrain to cover before we get there.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.



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