Retail sales increased 1.9 percent in September from August, much better than the 0.7 percent consensus expectation. Sales were up 1.5 percent excluding motor vehicles and parts, and 1.9 percent excluding gasoline. Excluding autos and gasoline sales were up 1.5 percent.
Control sales—excluding food service, autos and parts, gasoline, and home improvement stores, and which go into nominal consumer spending in GDP—rose 1.5 percent in September from the previous month. Control sales were up 9.1 percent year-over-year in September.
Total retail sales, as well as most of the major aggregates, are actually above their pre-pandemic level now, despite enormous job losses in the U.S. economy from early 2020. Although employment has soared over the past few months, it is still almost 11 million jobs below its pre-pandemic peak in February. One-time stimulus payments distributed to many households earlier this year and expanded access to unemployment insurance benefits have allowed consumers to increase their purchases. With consumer spending making up about two-thirds of U.S. GDP, this has jumpstarted a nascent economic recovery.
A gradual return to more-normal spending patterns, rising employment, the boost to household incomes from stimulus payments earlier in the year, very high savings, strong home sales, and very low interest rates are all positives for retail sales growth through the rest of 2020 and into 2021.Online sales will continue to increase much more rapidly than brick-and-mortar sales.
Although sales growth is strong, it will slow through the rest of this year and into next year. The slowing will be even larger if Congress does not pass another stimulus bill. Unemployment remains pervasive throughout the U.S. economy, and households with unemployed workers will need to cut back on their spending due to the fading impact of the one-time stimulus checks and the recent expiration of extra unemployment insurance benefits. A lack of additional household stimulus would be a significant drag on the recovery in the months ahead.
Sales growth was strong across most segments in September compared to August. Sales at auto dealers were up 4 percent over the month, as stimulus payments and low interest rates spurred sales. Sales at clothing stores jumped 11 percent, and sales at specialty stores were up almost 6 percent. Sales at general merchandise stores rose 2 percent, including a 10 percent jump for department stores, with households gradually returning to in-person shopping. Food service (primarily restaurant) sales rose more than 2 percent over the month, although they remained down 14 percent in September on a year-ago basis as many households are still reluctant to venture out. Building materials sales were up a little less than 1 percent in September from August, but were up 14 percent from one year earlier, as people repair and spruce up their homes given that they are spending a lot more time there. Food and beverage sales (primarily grocery stores) were flat on the month, but were up a little more than 10 percent year-over-year as people continue to eat at home more because of the pandemic.
The PNC Financial Services Group, Inc. is one of the largest diversified financial services institutions in the United States, organized around its customers and communities for strong relationships and local delivery of retail and business banking including a full range of lending products; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. For information about PNC, visit www.pnc.com.
