U.S. consumers boosted spending at stores and auto dealerships in June for the second straight month as states reopened for business. The Commerce Department said June retail sales — a measure of purchases at stores, at restaurants and online — increased a seasonally adjusted 7.5% on the month. Retail sales totaled $524.3 billion in June, up from $487.7 billion in May and nearly back to pre-pandemic levels, according to the Wall Street Journal.
- On the other hand… A separate reading on the jobs market — new worker claims for unemployment insurance — held nearly steady at a seasonally adjusted 1.3 million for the week ended July 11, the Labor Department said, a sign the rise in Covid-19 infections and related restrictions on businesses is causing the labor market’s healing to stall. Weekly claims have declined from a late March peak of 6.9 million weekly claims, but remain historically high.
- Be Smart: Economists say a recent surge in coronavirus infections could again put the brakes on retail spending, as states pause or reverse reopening plans for indoor dining, movie theaters and other activities. Consumer spending is the main driver of the U.S. economy, accounting for more than two-thirds of economic output, and retail sales account for about a quarter of all consumer spending.
- Why it matters: U.S. retailers are on track to close as many as 25,000 stores this year as the coronavirus pandemic upends shopping habits. That is more than double the 9,832 stores that closed in 2019. So far this year major U.S. chains have announced more than 5,000 permanent closures. Many clothing retailers were in bad shape before the pandemic as consumers shifted spending to travel, entertainment and other experiences, and new online startups siphoned sales from established players. [WSJ]