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Retail sales increased in August from the previous month, but at a slower pace after improved unemployment benefits provided by the federal government ended.
Retail sales in the United States rose 0.6% in August, the Commerce Department reported Wednesday. That’s below the 1% forecast by economists surveyed by Refinitv. In July, retail sales grew 0.9%, the Commerce Department said. That gain was already significantly slower than the 8.4% gain in June.
A supplemental weekly unemployment insurance of $ 600, which had been part of the government’s first stimulus bill, ran out in late July. Since then, Congress has been unable to agree to another boost to unemployment benefits. President Trump signed an executive order to reinforce benefits again, albeit with less money, by diverting funds from the Federal Emergency Management Agency.
Consumer spending is the largest engine of US economic growth, and retail sales are a major component of that. However, the Commerce Department report does not include expenses for services, such as haircuts, health care and financial services.
Some economists say continued growth in retail sales is dependent on future government stimulus funds and relief for people who have lost their jobs.
“A partial relapse [in retail sales] People who have been receiving improved unemployment benefits … are likely to cut their spending over the next few months, “said Ian Shepherdson, an economist at Pantheon Macroeconomics, in a research report Tuesday.” Income was affected by the cut in benefits is too big for people to ignore. ”
Some background: Retail sales fell to a seven-year low in April as the coronavirus prompted stores across the country to close their doors. Sales recovered to pre-pandemic levels in July.
Although retail sales have rebounded, spending has not gone to all retailers equally.
So far in 2020, nearly 8,000 stores have said they will close permanently, according to Coresight Research, a retail research and advisory firm. He anticipates the closings to set a new annual record this year with up to 25,000, breaking last year’s record of 9,302 closings tracked by the firm.