For the first time since spring, U.S. retail sales have declined, raising questions about the strength of consumer spending and how retailers are faring in the all-important holiday shopping season. Economists said the decline was a “warning sign” that the economy was entering a rough patch and in need of a jolt from another round of government stimulus.
Retail sales fell 1.1 percent in November as spending on categories like automobiles, electronic stores, clothing and restaurants and bars softened, according to a report from the Commerce Department on Wednesday.
Economists had expected a smaller decline amid robust holiday sales, driven by online spending. But the Commerce Department also revised its tally for October to a 0.1 percent decline, from an increase of 0.3 percent reported earlier.
The U.S. economy has slowed in recent months amid a surge in coronavirus cases and a steady increase in the ranks of the unemployed. Even as businesses have come under fresh pressure, lawmakers are still trying to agree on a new stimulus package. This week, top Democrats and Republicans on Capitol Hill are nearing a $900 billion deal that would expand unemployment benefits and provide new stimulus checks to consumers.
The decline in retail sales in November added new urgency to those discussions, as consumer spending, which for months had been a big driver of the broader economic recovery, slowed far more than expected.
“Weak retail sales in the fall, along with a recent increase in unemployment insurance claims, are warning signs for the economy at the end of 2020,’’ Gus Faucher, chief economist at PNC Financial Services Group, said in a research note.
The uncertainty around holiday spending has been exacerbated as retailers pushed annual sales events into October, in a bid to jump-start the season and prevent crowded stores and shipping delays in November. Many major chains reported sales gains in October, but they were not certain about how it would affect spending in November and December.
Mr. Faucher also noted that the boom in shopping this spring after the restrictions were lifted and stores reopened reduced “the need for purchases at the end of the year.”
Consumers have not been following normal shopping patterns this year, making month-to-month sales difficult to predict. Black Friday, which has traditionally signaled the start of the holiday shopping season, was also largely a bust for many retailers amid the rise in cases. Some companies reported that in-person traffic that day declined by as much as 50 percent from last year, as shoppers concerned about the virus stayed away from the stores. Still, online sales have been strong through the holidays and November sales were up 4 percent over last year’s figures.
With the new concerns around shopping in person, retailers have been racing to accommodate a surge in shipping demand, grappling with new surcharges and delays with major carriers including UPS and FedEx.
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