Although US retail sales increased slightly from July to August, the final rate of growth fell below expectations.
A recent CNN report referenced data from the US Commerce Department and showed that US retail sales rose 0.6% in August, which was “below the 1% predicted by economists surveyed by Refinitv.”
Why the slow growth?
There are several reasons for this, but experts have identified that the ending of the supplemental $600 weekly unemployment insurance from the government's first stimulus bill (which ended in July) is a primary reason. That supplemental income was most likely driving the 8.4% gain US retail saw in June.
Without extra income coming in, plus the fact that many Americans have had their financial situation impacted by COVID-19, how will retail sales go for the rest of the year?
Where US retail is heading
In the same CNN article, Ian Shepherdson, economist at Pantheon Macroeconomics, suggested it’s reasonable to expect retail sales to relapse because “people who have been receiving enhanced unemployment benefits... [have] cut their spending.”
While the relapse may be representative of overall retail, there is still promising growth in, specifically, online retail.
Our own Insights data shows that, since the start of September, online retail revenue is up YoY, and now sits at +65%.
It's clear that, though the pool of disposable income may be smaller for US shoppers on the whole, when they do choose to shop, they are increasingly turning to online channels to facilitate their transactions.
Based on how the data is currently shaping up, this trend could continue throughout the holiday shopping season.