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Retail Sales Rebounded in May, but the Road Back Is Long

Retail sales rebounded sharply in May as thousands of stores and restaurants reopened after lockdowns were lifted and federal stimulus checks and tax refunds fueled a burst of spending, a sign that the United States economy is lurching back to life.

But while the 17.7 percent rise in sales reported on Tuesday is the largest monthly surge on record, the underlying data presents a more complicated picture and shows just how arduous an economic recovery from the coronavirus pandemic will be.

The May numbers followed two months of record declines, and overall sales were still down 8 percent from February. Some categories, like clothing, were down as much as 63 percent from a year earlier. And many of the stores and restaurants that welcomed back customers last month did so with fewer employees, reflecting a permanently altered retail landscape and an ominous sign for the labor market.

“I think a lot of it is lockdown fatigue,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “I would caution not to be fooled by this large gain. We still have a long way to go in repairing the economy.”

May’s retail sales figures became the latest data point fueling the debate in Washington and on Wall Street about whether a broad reopening of businesses will cause the economy to snap back quickly or if additional stimulus measures are needed.

President Trump immediately seized on the positive monthly figures as evidence that a recovery was taking hold. “Looks like a BIG DAY FOR THE STOCK MARKET, AND JOBS!” he wrote on Twitter minutes after the Commerce Department released the numbers.

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Credit…September Dawn Bottoms/The New York Times

But Jerome H. Powell, chair of the Federal Reserve, sounded a more cautionary note around the broader health of the economy on Tuesday. Mr. Powell told the Senate Banking Committee that even as some parts of the economy were seeing a modest rebound, “levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery.”

“Until the public is confident that the disease is contained, a full recovery is unlikely,” he said. “The longer the downturn lasts, the greater the potential for longer-term damage from permanent job loss and business closures.”

The mixed signals about the economy fueled volatile trading on Wall Street. Stocks rallied in the morning after the retail numbers were released. But many of those gains soon evaporated, as investors processed the economy’s murky longer-term outlook. By early afternoon, the market had sprung back, with the S&P 500 ending the day up 1.9 percent.

The increase in total retail sales followed a 14.7 percent drop in April, the largest monthly decline in nearly three decades of record-keeping, and an 8.3 percent decline in March.

Economists had expected a rebound from April, when widespread business closures drove retail sales to their lowest level since 2013, though the gain was greater than some had expected.




Monthly Retail Sales

$500 billion

-7.9%

 

450

RECESSIONS

-21.8%

400

Change from

Feb. 2020 level

350

2006

2008

2010

2012

2014

2016

2018

2020

Monthly retail and food sales

$500 billion

-7.9%

 

450

RECESSIONS

-21.8%

400

Change from

Feb. 2020 level

350

’06

’08

’10

’12

’14

’16

’18

’20


Seasonally adjusted

Source: Commerce Department

By The New York Times

After more than a month of quarantine, May brought a tentative restart of brick-and-mortar retailing across most of the country, with major chains like Macy’s and Gap reopening hundreds of stores. Some restaurants that had either closed or shifted their business to delivery and curbside pickup also reopened for in-person dining.

Driving some of the sales gains were warm weather, a sense of relief after weeks cooped up at home and optimism from some that the worst of the pandemic could be over. But they were also lifted by stimulus money — totaling $1,200 per recipient, plus $500 per child — that will run out in the coming months, with no indications that Congress intends to pass another round of assistance.

A jump in spending on motor vehicles and at restaurants and bars accounted for just over half of the overall gain in sales. Sales at clothing and clothing accessories stores, which were hit especially hard by the closures, rose 188 percent in May, while spending at furniture and home furnishing stores jumped 90 percent. Still, clothing sales were down 63 percent from a year earlier, while furniture was down 22 percent.




Change in May

retail sales from:

Last

month

Last

year

Clothing

+188%

–63

%

Furniture/furnishings

–22

+90

Sporting goods/

hobbies/musical

instruments/books

+5%

+88

Electronics/appliances

+51

–30

Motor vehicles/parts

+44

–4

Food service/

drink places

+29

–39

Total retail sales

+18

–6

Miscellaneous

+14

–23

Gas stations

+13

–31

Building materials/

garden supplies

+11

+16

Nonstore retailers

+9

+31

General merch.

+6

n.c.

Food/drink stores

+2

+15

Health/personal care

n.c.

–10

Change in May

retail sales from:

Last month

Last year

Clothing

+

188

%

63

%

Furniture/furnishings

+

90

22

Sporting goods/hobbies/

musical instruments/books

+

88

+5

%

Electronics/appliances

+

51

30

Motor vehicles/parts

+

44

4

Food service/drink places

+

29

39

Total retail sales

+

18

6

Miscellaneous

+

14

23

Gas stations

+

13

31

Building materials/

garden supplies

+

11

+16

Nonstore retailers

+

9

+31

General merchandise

6

+

n.c.

Food/drink stores

+

2

+15

Health/personal care

n.c.

10


Note: Data are the percentage change to May 2020 from April 2020 and May 2019, and are based on seasonally adjusted figures.

Source: Commerce Department

By The New York Times

No matter how fleeting, the rebound in May was a welcome boost, especially for small businesses like the Bookstore of Gloucester, an independent bookseller in Gloucester, Mass.

The store carries a selection of best sellers, books on race and books on the city’s maritime history. Even though it was selling only through curbside pickup and mailing out orders, sales were not much lower than in May last year.

“We were pleasantly surprised,” said Nicole Dahlmer, an employee.

She attributed the relatively robust sales to a loyal customer base and to longer waits at large booksellers like Amazon during the pandemic.

“The real test is if tourism holds up this summer,” said Ms. Dahlmer, who usually is paid to work in the store but has been working on a volunteer basis to help out the owner during the pandemic. She said she expected to return to a paid position soon.

Aneta Markowska, the chief financial economist for the investment bank Jefferies, said that while she had anticipated a jump in retail sales in May, it was off “a pretty low hurdle.” The bigger question was the sustainability of any improvement, since spending was bolstered by tax refunds and government stimulus efforts.

“By the time we get into July, those tax refunds will probably be largely spent,” Ms. Markowska said, “and then you’re back to, hey, what’s the underlying employment growth? Because that’s going to have to be the key driver of spending going forward.”

The positive numbers in May also mask some of the intense strain on businesses.

While his White Electric Coffee shop in Providence, R.I., was closed, Tom Toupin sold a special “Stay at Home” brew online, donating 20 percent of the sales to the state’s Covid-19 relief fund.

In preparing to reopen this month, Mr. Toupin spent about $1,000 on a device that enables contactless payments and reconfigured the front counter and register to create more distance between employees and customers.

But in the first few days after reopening, the shop had about 60 customers a day, down from a typical 350. Mr. Toupin has had to waste food because he was not sure how many customers would come, he said. Five people are working in the shop now, down from the usual team of a dozen.

  • Frequently Asked Questions and Advice

    Updated June 16, 2020

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

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      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

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      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

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      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

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      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

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      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.