In a troubling sign for the United States economic recovery, retail sales posted their steepest decline in seven months in November as surging COVID-19 infections ushered in more business-sapping restrictions to curb the spread of the virus.
US retail and food services sales were $546.5bn in November, the US Commerce Department said on Wednesday, marking a 1.1 percent fall from the previous month.
Retail sales gauge consumer spending – the main engine of the US economy accounting for some two-thirds of growth. Notably, the nation’s consumers drove less in November. Sales at department stores, as well as eating and drinking establishments, were also significant areas of weakness.
November’s slowdown is especially concerning given the importance of holiday sales to the nation’s retailers.
The normally busy holiday shopping season has suffered as consumers hunker down and engage in social distancing and states and cities order restrictions to limit exposure to COVID-19.
Millions of Americans are also experiencing severe financial hardships due to job losses or leaving work because of increased demands of childcare as daycare centres remain close and schools switch to full or partially online learning regimes.
Even those who are fortunate enough to have a job and are earning an income may be hesitant to break the bank this holiday season due to the uncertainty clouding the outlook.
“With mobility slowing, employment softening, and demand hesitant, the holiday season could turn out to be rather miserable,” said Oxford Economics chief US economist Gregory Daco in a note to clients.
Of the 22 million jobs lost to lockdowns in March and April, only a little more than 12 million have been recovered. And while the nation’s unemployment rate edged down to 6.7 percent in November, it fell because fewer people were actually looking for a job.
Myriad virus relief aid programmes expired at the end of July – including a federal $600 weekly top-up to state unemployment benefits and a programme that offered a lifeline to small businesses.
More protections are due to expire at the end of this year including unemployment benefits for the self-employed and gig workers and a federal moratorium on evictions.
Congress has been haggling for months over a new round of virus relief aid. News reports on Wednesday said Democrats and Republicans were closing in on a $900bn deal that would include another round of stimulus cheques for eligable Americans, but no financial aid for cities and states, or liability protections for the nation’s businesses.