“We’ve got to be braced for a period of two, three, four months of extreme vulnerability for the economy.”
Yikes. This is not good.
November usually kicks off the period when businesses get back in the black (hence Black Friday). But new COVID-19 lockdowns put a damper on those hopes since spending fell by 1.1% in November.
Now, 1.1% does not appear as much, but as I said, November is the time for businesses to profit.
It also shocks me spending fell because online shopping has taken off these past few years, but especially in 2020.
Online stores did help push November 2020’s numbers above November 2019’s numbers. Plus, the decline could have been a lot worse if it wasn’t for online shopping:
Advance estimates of U.S. retail and food services sales for November 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $546.5 billion, a decrease of 1.1 percent (±0.5 percent) from the previous month, but 4.1 percent (±0.7 percent) above November 2019. Total sales for the September 2020 through November 2020 period were up 5.2 percent (±0.5 percent) from the same period a year ago. The September 2020 to October 2020 percent change was revised from up 0.3 percent (±0.5 percent)* to down 0.1 percent (±0.2 percent)*.
Retail trade sales were down 0.8 percent (±0.5 percent) from October 2020, but 7.1 percent (±0.7 percent) above last year. Nonstore retailers were up 29.2 percent (±1.6 percent) from November 2019, while food services and drinking places were down 17.2 percent (±3.7 percent) from last year.
The evidence is not just in the Commerce Department report:
U.S. shoppers spent less than last year over a five-day stretch including Black Friday and Cyber Monday as increased online shopping was offset by fewer people visiting physical stores during the pandemic. People spent an average of just under $312 on holiday-related purchases from Thanksgiving to Cyber Monday, down 14% from 2019 though on par with 2018, according to a survey by the National Retail Federation and Prosper Insights & Analytics.
Retailers also pushed an earlier start to the holiday season, both to limit crowds at stores and to ease pressure on supply chains by avoiding preholiday order bottlenecks.
Other data show that spending has continued to lag since the Thanksgiving holiday. JPMorgan Chase & Co.’s tracker of 30 million credit and debit cardholders recorded a 3.5% decline in spending from a year earlier in the week through Dec. 12. Credit- and debit-card data collected by research firm Affinity Solutions and research group Opportunity Insights showed that overall spending was down 1.7% in the week ended Dec. 6 compared with January levels.
Plus, without jobs then people cannot shop and spend money. The numbers also show each sector is important to the economy:
“We’ve got to be braced for a period of two, three, four months of extreme vulnerability for the economy,” James Knightley, an economist at ING Financial Markets LLC, said. Mr. Knightley expects gross domestic product to contract about 1.2% in the first quarter of 2021 after increasing around 1.5% to 2% in the fourth quarter. Mr. Knightley said he “can’t see containment measures wound down meaningfully until vaccination is at a critical mass.”
The spending numbers align with the unemployment figures we’ve seen each week and the November jobs report.
The economy only added 245,000 jobs in November. Experts predicted 440,000 jobs because stores expect busy days leading up to Christmas. The labor force participation went down 61.5% and the unemployment rate did not budge or had little change among major groups except for adult women.DONATE
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