Amid increasing uncertainty around the Delta variant, U.S. retail sales tumbled last month, with a 1.1% decrease from the previous month, worse than economists’ projections, the Commerce Department said today.
This follows June’s increase of 0.6%, as demand for goods remained strong even as spending is shifting back to services, and May’s disappointing 1.7% decrease, according to CNBC.
Economists surveyed by The Wall Street Journal estimated that retail sales — a measure of purchases at stores, at restaurants and online — would fall by 0.3% last month compared with June.
Total sales for the period between May 2021 and July 2021 were up 20.6% from the same period a year ago, according to the Commerce Department.
Retail trade sales were down 1.5% from June 2021; clothing and clothing accessories stores were up 43.4% from July 2020, while food services and drinking places were up 38.4% from last year.
Retail sales represented $617.7 billion, while a decline compared to June, a figure representing 15.8% above July 2020.
Several factors are driving the decrease, including the Delta variant and the end of federal stimulus.
Pooja Sriram, U.S. economist at Barclays, tells The Wall Street Journal that she expects increased services spending to continue, but that consumer spending will grow more slowly than earlier this year as the boost from federal aid to households wanes.
In addition, last week, a University of Michigan survey showed consumers reported a stunning loss of confidence in the first half of August. The Consumer Sentiment Index fell by 13.5% from July, to a level that was just below the April 2020 low, according to the survey.
Chief economist Richard Curtin said that the drop stemmed “mainly from dashed hopes that the pandemic would soon end,” according to the survey.
“There is little doubt that the pandemic’s resurgence due to the Delta variant has been met with a mixture of reason and emotion. Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end. In the months ahead, it is likely that consumers will again voice more reasonable expectations, and with control of the Delta variant, shift toward outright optimism,” Curtin added.
More From GOBankingRates