Lack of Stimulus Slows Retail Sales

The U.S. Department of Commerce has released its preliminary reading on retail sales in the month of October, and the results were a tad under expectations. With no stimulus package coming into play, overall retail sales rose just 0.3%, and retail sales excluding vehicles rose just 0.2% last month.

Econoday was calling for headline retail sales to be up by 0.4% and was calling for the sans vehicles report to be up by 0.5%. Unfortunately, this is a story that continues to be about the online buying that is taking place in the COVID-19 pandemic.

Even after backing out the gasoline component and the vehicles component, retail sales rose by just 0.2% in October. While a lack of stimulus did not weigh on retail sales in September, that does not seem to be the case for October.

The monthly retail sales data can be somewhat volatile without seasonal adjustments, but the rule of thumb for the broader economy is that consumer spending activity accounts for more than two-thirds of gross domestic product.

Tuesday’s seasonally adjusted report showed that all U.S. retail sales were $553.3 billion. While the monthly gains are paltry, that is still 5.7% above the sales from October of 2019. The figure for retail trade sales was up 8.5% from October of 2019.

Online sales generally are defined as the nonstore retail sales. This figure was up 29.1% from October of 2019. The category for sales of building material and garden equipment and supplies dealers rose by 19.5% from October of 2019.

November has seen a choppy start, with the election and with spikes in the numbers of COVID-19 cases. That report is almost certain to be dogged by a lack of economic stimulus as well. The November report will be issued on December 16, 2020.