WASHINGTON (Reuters) – U.S. retail sales accelerated in September after a strong quarter of economic activity, but the recovery from the Covid-19 recession is at a crossroads as government money is flowing out and companies continue to lay off employees.
New corona virus cases are on the rise across the country, which could lead to restrictions on businesses such as restaurants, gyms and bars, and reduce consumer spending. The economy is already shifting to lower gear. Other information on Friday showed an unexpected drop in production at factories last month.
“Although sales growth is strong, it’s going to be slow later this year and next,” said Guz Foucher, chief economist at BNC Financial in Pittsburgh, Pennsylvania. “The recession will be even greater if Congress does not pass another stimulus bill. Unemployment is widespread throughout the US economy.”
Retail sales rose 1.9% last month as consumers bought motor vehicles and clothing, dining and exhibiting hobbies. This is an unpredictable 0.6% increase in August.
Economists who voted for Reuters predict that retail sales will rise 0.7% in September. Some said the September upsurge was exacerbated by difficulties in removing seasonal fluctuations from data following the shock of COVID-19. Uncorrected retail sales fell 2.8% after falling 1.0% in August.
Retail sales soared above February levels, exacerbating the contagion for home-life-completing products, including furniture and electronics. Hate on public transport has boosted motor vehicle purchases. Retail sales rose 5.4% in September.
They calculate the product components of consumer spending with services such as health, education, travel and hotel accommodation.
Excluding automobiles, petrol, construction materials and food services, sales rose 1.4% last month after falling 0.3% in August.
The so-called major retailers are very closely related to the consumer spending components of GDP. They were previously estimated to have fallen 0.1% in August.
Economists attribute the strength of retail sales to financial stimulus, especially the tens of thousands of unemployed Americans who receive weekly subsidies. Strong sales in September strengthened expectations of record consumer spending and economic growth in the third quarter.
Growth estimates for the July-September quarter are at an annual rate of 35.2%. It will recover two-thirds of the lost output due to COVID-19. The economy contracted at a rate of 31.4% in the second quarter, the deepest decline since the government began to hold records in 1947.
U.S. stocks have risen for three consecutive days since Pfizer announced retail sales data and its Govt-19 vaccine candidate could apply for emergency use in early November.
BROAD SALES GAINS
Last month, sales of auto dealerships rose 3.6%. Receipts at restaurants and bars increased 2.1%. Receipts at clothing stores rose 11.0%.
Kevin Cummins, a U.S. economist who heads Northwest Markets in Stamford, Connecticut, said: “Some gains may have reflected increased demand from school sales, but the announced strength of distance learning in most schools seems dramatic and unsustainable.”
Even with September gains, sales at bars, restaurants and clothing stores are still below their pre-infection levels.
Purchases at electronics and appliance stores fell 1.6%.
Online and mail order retail sales rose 0.5%. Furniture store sales rose 0.5%. Sales of sporting goods, entertainment, musical instruments and bookstores rose 5.7%. These segments increased year-on-year in September, economists said, showing the uneven impact of the recession.
“This is further evidence of how many high-income earners have been able to mitigate the epidemic by working from home, while low-wage workers are forced to choose between jobs that put them at risk, and unemployment when they find them,” said Chris Low, of F. in New York. Chief Economist at .HN Financial.
The White House and Congress are struggling to reach an agreement on another recovery package for businesses and the unemployed. The government said on Thursday that new claims for unemployment benefits had risen to a two-month high last week.
Last month’s rise in retail sales pushed consumer spending towards the fourth quarter, which will ensure that the economy continues to expand despite the moderate pace. Growth estimates for the fourth quarter have been cut from 10% to 3%.
Some economists believe that historic savings will reduce consumer spending in the absence of much financial support from the government. However, others warn that rising COVID-19 infections and job losses will motivate some consumers and motivate them to protect savings.
In a study conducted Friday at the University of Michigan, consumer sentiment increased in early October.
However, consumers are concerned about the current economic situation because of “the slowdown in employment growth, the resurgence of COVID-19 infections and the lack of additional federal relief payments.”
They were less interested in buying home appliances. The stock that believed it was a good time to buy a car was the lowest in nine years.
(This story has been updated to correct typography errors in the title)
Lucia Muttigani Report; Editing by Sisu Nomiyama, Paul Simao and Andrea Richie