With the resurgence in COVID-19 cases, retail and economic recovery is “being tested daily” in the US, stated National Retail Federation (NRF) chief economist, Jack Kleinhenz.
“Optimism about the economy and retail spending is being tested daily with the spread of the coronavirus,” Kleinhenz said. “Big questions are looming, and we are all grappling to discern what incoming data is telling us about the health of the economy and consumers. Depending on the data selected, the answers are not entirely clear.”
Consumer spending was up 8.2% in May, ending two consecutive months of decline, and up another 5.6% in June. Retail spending as calculated by NRF – focused on core retail – was up 4.9% in June. Monthly numbers for July are not available yet. But the Federal Reserve Bank of New York’s Weekly Economic Index – a composite of indicators – worsened from -6.65% on July 18 to -7.24% as of July 25, with officials citing a decrease in retail sales.
“A key question is whether the pace of growth and momentum will carry forward over the next few months,” Kleinhenz added. “Based on quarterly and monthly data, the US economic recovery continues despite elevated COVID-19 cases. But in examining weekly data, the pace of improvement appears to be slowing. Could it be that we are at or heading back to the same spot we were at two months ago” – that’s the big question.
Several weekly reports agreed with the monthly data that “showed the economy on a good start down the recovery runway, they now suggest that the economy is moving sideways. Time will tell, but the bottom line is that the economy is far from being out of the woods. The question is whether it is re-entering the woods,” concluded Kleinhenz, while reaffirming that indeed, recovery is “being tested daily” in the US.