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Retail Sales Surge in June but Further Gains Will Be Challenged

July 22, 2020

Tuesday, July 21st, 2020

“Retail Sales Surge in June but Further Gains Will Be Challenged”

Retail sales, ex-gas, jumped a seasonally adjusted 7.5% in the month of June, miraculously recovering back above pre-pandemic levels. While much of the economy remains underwater from the various stages of economic re-openings, the U.S. consumer once again showed its resilience to spend amidst the uncertainty. 



June’s increase in retail sales was driven by a pickup in larger-ticket items, including autos, furniture, clothing and electronics.

There were, however, some early signs that sales started to fade in the back end of June as several states pulled back on plans for re-openings and other states dealt with their first major surge in cases. Consumer spending will also run into a headwind should the increased unemployment benefits expire this month, and should layoffs resume from businesses that are not able to survive extended shutdowns.

Regardless of what is to come, it is an astonishing recovery for the heart of the U.S. economy. As a reminder, consumer spending accounts for ~70% of the U.S. economic output and retail sales is one of the best barometers for overall economic activity.

The last few months also showed which companies were ahead of, or able to quickly adapt to, trends towards online shopping. Consumer spending through non-store channels (e-commerce) was up 29.6% year-over-year in June, nearly triple the pre-pandemic growth rate of 11.4% in February1.

Even when things return to normal, it is likely that the pandemic will be considered an accelerant of the trends that were already in place for e-commerce long-term.


Jack Holmes, CFA®





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