Retail sales rose a solid 0.6 percent in August. Sales growth in July was 0.9 percent, revised lower from a 1.2 percent increase. Sales excluding autos were up 0.7 percent in August, and were also up 0.7 percent excluding autos and gasoline.

Retail sales have taken a roller coaster ride in recent months, but now the train is entering the station. Sales fell 22 percent between February and May, with much larger declines in some categories like restaurants and autos, as the pandemic shuttered stores and consumers stayed home. But with stores and restaurants reopening and households spending thanks to stimulus payments and extra unemployment insurance benefits, retail sales increased 32 percent from their April through August. Total retail sales in August were slightly higher than their February level, before the pandemic, despite an unemployment rate of 8.4 percent.

Retail sales growth will be weaker going forward. The pandemic continues to spread, unemployment remains extremely elevated, and fiscal stimulus is fading. Still, a gradually improving job market and low interest rates will allow households to slowly increase their purchases through the rest of 2020 and throughout 2021.

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