But drawing in the report was a clear point.
After falling to a seven-year low in April, retail sales returned to their pre-pandemic level in just a few months. As of July, they were at their highest level on record.
The milestone came in part because the Department of Commerce raised its June retail sales figures higher.
Consumer spending is the biggest driver of US economic growth, and retail sales are an important part of it. However, the report does not cover expenditure on services – issues such as rent cuts, medical care and financial services. So far, spending on retail goods has returned faster than spending on services.
The retail rebound has been driven by a few strong categories.
Compared to July last year, sales were up 24.7% at nonstore retailers, a sector that includes e-commerce platforms. Sales were also strong at construction and garden suppliers, grocery stores and shops selling sporting goods, hobby supplies and musical instruments.
Meanwhile, the report showed that gas stations, department stores and clothing retailers are still operating far below normal.
Overall, the data indicate that, despite growing cases of coronavirus and a devastating US economy, consumers are still spending – even if the ways they spend have shifted.
“The retail sales figures are encouraging, as they suggest that the recovery itself has remained in the face of the resurgence in virus cases,” Michael Pearce, senior U.S. economist at Capital Economics, said in a research note Friday.
Slower momentum ahead
Despite reaching a milestone for pre-crisis, retail sales could slow in the coming months, economists warn. The 1.2% gain from July was already significantly slower than the gain of 8.4% in June.
“Given continued high unemployment, retail sales in August and fall will rely heavily on the timing and scope of more government assistance,” Robert Frick, a business economist at the Navy Federal Credit Union, said in a note Friday.
The pandemic has cut parts of the retail trade and forced a growing list of markets into bankruptcy.
So far in 2020, more than 6,000 stores have said they will close permanently, according to Coresight Research, a retail research and consulting firm. It expects closures to snowball and set a new annual record of as many as 25,000 this year, breaking last year’s record of 9,302 closures by the company.
Stein Mart joins several other retailers that have gone bankrupt in recent months, including Tuesday Morning, JCPenney, Sur La Table and Muji. Pier 1 Imports, which filed for bankruptcy in February and closes all its stores, announced in July that it had found a buyer for its online operations and intellectual property.
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