Shoppers held back on spending last month, but the United States economy could soon see a recovery as COVID-19 vaccines continue to roll out and another round of fiscal stimulus is being doled out.
According to the U.S. Census Bureau, retail sales fell 3% to $561.7 billion in February — a bigger drop than economists’ predictions for a 0.5% decline. (January’s sales, on the other hand, were upwardly revised to 7.6% from the earlier estimate of a 5.3% gain.) The slump could be attributed to the unseasonably frigid weather that swept the country, particularly in the South, while the boost from the second stimulus bill faded after $600 checks hit bank accounts earlier in the year.
Last month, consumers spent less on purchases across the board, from automobiles and electronics to furniture and home improvement. The only category to see an advancement was that of gasoline stations, up 3.6%. Data from the Census Bureau showed that shoppers largely avoided department stores, which saw a decrease of 8.4% in retail sales, as well as sporting goods stores, recording a 7.5% dip. Sales at non-store or online retailers tumbled 5.4%, while clothing and accessories stores slid 2.8% and miscellaneous store retailers were down 3.4%.
However, experts have suggested that President Joe Biden’s newest $1.9 trillion coronavirus relief package — which would provide eligible individuals $1,400 in direct payments and an extension to the $300 in weekly jobless aid — gives the retail industry reason for optimism heading into the months ahead.
“A lot of that stimulus money is going to filter back to retail sales,” said David Berliner, leader of the restructuring and turnaround services practice at financial advisory services firm BDO. “The numbers were very strong in January, and February is down very little. With the new checks going out now, we’re going to see pretty good pent-up demand for a lot of consumer products and that will help retailers out.”
The package also provides billions of dollars for COVID-19 inoculations, testing and contact tracing, which could temper shoppers’ anxieties about returning to stores.
“The passing of the American Rescue Plan will positively affect the industry — putting more money in consumers’ pockets, providing relief to small businesses in need and further bolstering the vaccine distribution efforts,” said Tom McGee, president and CEO of the International Council of Shopping Centers. “Only one month removed from extremely strong January retail sales results, we expect a rebound in the coming months as containment of the virus improves.”