WASHINGTON: U.S. retail sales fell more than expected in November, likely weighed down by raging new COVID-19 infections and decreasing household income, adding to growing signs of a slowdown in the economy’s recovery from the pandemic recession.
The second straight monthly decline in retail sales reported by the Commerce Department on Wednesday could nudge Congress to agree on another fiscal stimulus package. News of the weak start to the holiday shopping season came as Federal Reserve officials were wrapping up a two-day policy meeting.
The U.S. central bank is expected to keep interest rates near zero and deliver a playbook for what might prompt the Fed to pump more money into the economy.
Retail sales dropped 1.1% last month, with receipts declining almost across the board. Data for October was revised down to show sales slipping 0.1% instead of rising 0.3% as previously reported, adding a sting to the report. October’s dip was the first since April, when stringent measures to control the first wave of coronavirus cases crippled the economy.
The plunge in sales last month was led by motor vehicles, with receipts at auto dealerships tumbling 1.7% after being unchanged in October. Receipts at clothing stores plummeted 6.8%. Consumers also cut back on eating and drinking out. Sales at restaurants and bars dropped 4.0%.
Sales at electronics and appliance stores fell 3.5% and receipts at furniture stores declined 1.1%. There were also decreases in sales at sporting goods, hobby, musical instrument and book stores. But receipts at food and beverage stores rose as did those at building material stores.
Online and mail-order retail sales rose a modest 0.2%.
Wall Street opened slightly higher as investors hoped for additional fiscal stimulus and an affirmation of continued easy monetary policy from the Fed. The dollar fell against a basket of currencies. U.S Treasury prices were lower.
RECOVERY SLOWING
Excluding automobiles, gasoline, building materials and food services, retail sales declined 0.5% last month after a downwardly revised 0.1% fall in October. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have edged up 0.1% in October.
Weak retail sales added to data this month showing the economy, which plunged into recession in February, added the fewest jobs in six months in November. The number of people filing new claims for unemployment benefits jumped to a near three-month high in the first week of December.
The United States is struggling with a fresh outbreak of COVID-19 infections, with the death toll from the respiratory illness rising above 300,000 on Monday, according to a Reuters tally of official data. Many state and local governments have imposed new restrictions on businesses, while some consumers are avoiding shopping malls, restaurants and bars.
Restaurants moved outdoors over the summer and the arrival of cold weather is also undercutting spending.
The situation has been compounded by the loss of a weekly unemployment supplement. More than $3 trillion in government coronavirus relief is almost depleted. At least 9 million unemployed and underemployed Americans will lose government-funded benefits on Dec. 26, with Congress struggling to agree on another rescue package.
Though a vaccine for the coronavirus is being rolled out, it could probably take a while for many Americans to be inoculated. The spiraling virus and lack of additional stimulus have cemented expectations for GDP growth well below a 5% annualized rate in the fourth quarter.
The economy grew at a 33.1% rate in the third quarter after contracting at 31.4% pace in the April-June quarter, the deepest since the government started keeping records in 1947.
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