KETR

U.S. Retail Spending Declined The Most Since Historic Plunge In April

Dec 16, 2020
Originally published on December 17, 2020 8:08 am

Updated at 11:11 a.m. ET

U.S. retail spending declined the most since a historic plunge in April as new coronavirus surges restricted outings to stores and restaurants.

Retail sales dipped 1.1% in November compared with a month earlier, the Commerce Department said Wednesday.

However, retail spending — excluding food service — was still up 7.1% when compared with a year earlier, in part thanks to record-setting Black Friday and Cyber Monday online shopping sprees.

Like for much of the year, clothing and department stores as well as restaurants and bars took the biggest hits last month again. All have struggled to recover from waves of shutdowns and closures, and sales are still down heavily compared with last year.

The Commerce Department also revised October's data to show a decline of 0.1% instead of an increase of 0.3%.

For November, here's where the data showed people spending, compared with a month earlier:

  • Grocery stores: +1.9%
  • Home improvement and gardening stores: +1.1%
  • Online retailers: +0.2%
  • Sports, music and other hobby stores: -0.6%
  • Big-box stores: -1%
  • Furniture stores: -1.1%
  • Electronics stores: -3.5%
  • Restaurants and bars: -4%
  • Clothing and accessories stores: -6.8%
  • Department stores: -7.7%

U.S. shoppers are on track to spend more than $755 billion during the key end-of-the-year weeks — but many of the sales, in fact, began in October.

Retailers marked a record-setting start to the holiday shopping season but also warned they didn't know how much they'd be affected by pushing their biggest sales to earlier in the year.

After an unusual delay because of pandemic uncertainty, the National Retail Federation is now forecasting that retail sales will grow between 3.6% and 5.2% to their highest level ever during a holiday shopping season.

The trade group says shoppers will spend on average $998 on gifts, food, decorations and other holiday items — yearning to feel special in a difficult year.

Malls and food establishments, however, have been hammered by waves of shutdowns and restrictions as the U.S. has struggled to contain the pandemic. Spending at restaurants and bars is down 17.2% compared with last year.

The National Restaurant Association says 110,000 restaurants, or 17% nationwide, have permanently closed during the pandemic after being in business for an average of 16 years.

Many businesses — and families — have been anxiously watching U.S. lawmakers' protracted debate over extending pandemic aid. Several federal programs, including some unemployment benefits, are expiring at the end of December.

The latest government reports have painted a troubling picture of U.S. economic recovery: The number of people filing new unemployment claims jumped sharply, while new hiring slowed more than expected.

In retail, however, a surge in online shopping has led giants such as Amazon and Walmart to go on hiring sprees, especially for people to staff warehouses overflowing with orders. The Labor Department's data, adjusted for seasonal hiring patterns, showed a net loss of 35,000 retail jobs in November, but an increase of 145,000 jobs in transportation and warehousing.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

AILSA CHANG, HOST:

U.S. shoppers pulled back on spending at stores and restaurants last month. It's the biggest decline in retail spending reported by the Commerce Department since the historic collapse this - in the spring. NPR's Alina Selyukh has more.

ALINA SELYUKH, BYLINE: The actual number is 1.1%. That's how much retail sales dipped last month as compared to October. It's a key economic measure that includes spending on cars and gas, food and drink and, of course, shopping. The new surge of coronavirus cases has many cities and states once again restricting outings, and so restaurants and bars took one of the biggest hits in November.

CAMERON MITCHELL: It's really worse now than it really has been since the beginning of the pandemic.

SELYUKH: Cameron Mitchell runs dozens of restaurants, mostly high-end, in 13 states. He says September was his high-water mark.

MITCHELL: And then sales started to fall in October slightly. Then in November - we finished November at 52% of last year's sales.

SELYUKH: Now, in the world of retail stores, November was a peculiar month because that's when shoppers went on record-setting sprees for Black Friday and Cyber Monday. But something else unusual happened this year, says Jack Kleinhenz, chief economist at the National Retail Federation.

JACK KLEINHENZ: Many retailers were starting their Black Friday promotions even in October.

SELYUKH: That may be another reason why the November numbers don't look as great compared to a month earlier. A third reason was that many families ran out of the pandemic financial aid and boosted unemployment benefits. Last month, clothing in department stores saw a dip in sales, like for much of the year. So did electronics stores. And even online sales only grew 0.2%, compared to October. If this sounds dreary, Kleinhenz says it's important to take the long view.

KLEINHENZ: We focus in on year-over-year numbers. That's how retailers look at their performance.

SELYUKH: And compared to last year, this year's sales are actually higher, despite the pandemic.

Alina Selyukh, NPR News.

(SOUNDBITE OF DIPLO'S "MMXX - I") Transcript provided by NPR, Copyright NPR.