US retail sales fell for the third consecutive month in December, as the coronavirus pandemic led consumers to save pennies and settle at home.
Retailers and food service traders raised just under $ 541 billion last month – the lowest level since July – after falling 1.4 percent in November and 0.1 percent in October, the US Census Bureau said in Friday.
The 0.7 percent drop that was greater than expected in December came amid an increase in infections and deaths from COVID-19, which put pressure on retailers even at the height of the Christmas shopping season. Economists had expected sales to remain stable last month, according to Wrightson ICAP.
“The COVID-19 roadblocks have sent consumers to their homes, where they are too concerned about the prospects to spend a penny in stores and malls across the country,” said Chris Rupkey, chief economist at MUFG Union Bank.
December retail spending was 2.9 percent higher than in the previous year, but about 2.1 percent below the 2020 peak of around $ 553 billion that was reached in September, federal data show .
The slowdown came despite an unexpectedly strong holiday season, in which retailers recorded $ 789.4 billion in sales, an 8.3% jump from 2019, according to the National Retail Federation.
While consumers spent more on cars, clothing and toiletries in December, online and out-of-store sales fell 5.8 percent and electronics and home appliance retailers collected 4.9 percent less, the feds said.
Restaurants and bars fell 4.5 percent, while sales at food and beverage stores fell 1.4 percent – a possible sign of food insecurity among Americans struggling to survive during the pandemic, according to Jonathan Silver, CEO of Affinity Solutions, a global company with insights and marketing solutions.
“One of the biggest conclusions from today’s numbers is that the low-income groups that kept the economy going until the fall started showing spending fatigue, probably related to stagnant stimulus and potential unemployment problems,” said Silver.
The December slump came at a time when the U.S. economy cut jobs for the first time since April, when authorities imposed a new round of blocking measures to combat the spread of COVID-19.
Although vaccines being launched across the country may help retailers to recover in the coming months, “the pandemic has certainly changed the way we shop forever, so even when shop windows start to open again, e-commerce will still be an essential source of revenue for retailers, ”said Marwan Forzley, chief executive of the payment technology company Veem.