Retail sales bounce back strongly, to pre-pandemic levels. By Manuel Gutierrez, Consulting Economist to NKBA
Total retail sales increased by 2.6% in August, its third consecutive monthly gain. Volume now stands at $538 billion, exceeding the $530 billion that had been recorded in January prior to the pandemic.
The turnaround has been notable, after sales fell by 22% in April from January, to just $413 billion. The V-shaped charts below illustrate the sharp fall and rise.
A major contributing factor to the boost in retail sales was the federal government’s cash stimulus program, known as Economic Impact Payments, that provided many Americans with $1,200 payments to offset losses experienced due to the initial shutdowns caused by the pandemic. The government also provided $600 in weekly unemployment payments on top of regularly earned unemployment benefits for those who lost their jobs at this time. In fact, for several months, many were receiving more money in unemployment benefits than they had been when they were working.
The Commerce Department found, unsurprisingly, that among the various retail channels and categories it tracks, the Internet lead in August, with sales jumping 22% over last August to $83 billion for the month. Internet volume now accounts for 15% of total retail sales.
Building materials, which correlates more directly with kitchen and bath, had the second highest increase. It grew by 15% year-over-year to $37 billion, contributing 7% to total retail sales.
Sales of building materials remained strong during the worst of the pandemic, falling only 3% between January and April. Current sales, as can be seen in the chart below, are just a shade below the all-time peak of $37.4 billion recorded in June.
Retail categories registering a decrease were led by department stores, off 17% to just $9 billion in August. The declining trend for this category had been evident for years, and only accelerated with the onset of the pandemic. In fact, monthly sales are half what they were in January 2000.
Sales in the categories of Gas Stations and Restaurants & Bars were 15% lower than last August. These are two of the more obvious categories driven lower by the pandemic shutdown. Lower Gas Station sales are actually the result of two forces: people driving less than earlier in the year, and lower gas prices.
A survey conducted by Carinsurance.org found that consumers’ driving patterns plummeted, from an average of six hours a week to just 42 minutes. That equals just six minutes a day, with many not driving at all during the pandemic.
