US retail sales declined more than expected in November as the holiday season struggled to boost the economy
- US retail sales declined 1.1% in November, landing below the consensus economist estimate of a 0.3% contraction.
- The reading marks a slowdown from October's 0.1% contraction, and signals holiday promotions failed to offset soaring COVID-19 cases and new economic restrictions.
- Spending at retailers has now shrunk for two straight months, fueling concerns of a weakening economic recovery.
Spending at US retailers contracted more than expected in November as holiday promotions butted heads with new economic restrictions.
US retail sales dropped 1.1% last month, according to Census Bureau data published Wednesday. Economists surveyed by Bloomberg expected sales to fall 0.3%. The reading marked a sharp drop from October's 0.1% decline.
The reading marks the second straight retail-sales contraction following five straight months of growth. The $2.2 trillion CARES Act fueled a spring surge in spending as Americans deployed cash from direct payments and expanded unemployment benefits. That V-shaped trend has since played out, and spending remains below its pre-pandemic highs.
Sales gauges are among the most important indicators for measuring the depth and duration of the coronavirus recession. Consumer spending counts for roughly 70% of US economic activity, meaning disappointing reports could give way to weak growth and new pain.
November's reading is also the first to include spending from the holiday season. Consumers spent a record $9 billion on retail websites on Black Friday, according to estimates from Adobe Analytics. That's up 21% from the year-ago total. Yet in-store traffic more than halved amid rising coronavirus fears and various lockdown measures, and economists expected a 40% increase in e-commerce spending.
In-person shopping will likely plummet further before recovering. The US reported 189,783 new coronavirus cases on Tuesday, according to The COVID Tracking Project. Johns Hopkins University's count of total deaths surpassed 300,000, and hospitalizations continue to reach record highs. Some state and local governments have signaled they'll implement full shutdowns for the second time to slow the virus's spread. Such policies stand to cut further into retail sales.
Spending could see an early 2021 boost from a last-minute stimulus deal. Congressional leaders spent hours ironing out additional COVID-19 relief and a new government spending bill Tuesday night in an attempt to pass fresh stimulus before the end of the week.
Senate Minority Leader Mitch McConnell has backed a bill that includes expanded unemployment benefits and small-business aid but leaves out two more controversial elements: state and local government aid and pandemic-related liability protections.
Renewed fiscal support would provide a shot in the arm for the US economy as coronavirus vaccine distribution spurs new hopes for 2021 recovery. Pfizer's shot is already being rolled out, and the US Food and Drug Administration is expected to approve Moderna's vaccine in the coming days.
Still, widespread vaccination will take months, and a lack of adequate stimulus could see spending plunge before the economy fully rebounds.