All Posts Tagged: coronavirus

A Happy Holiday For Retailers?

Scott Anderson
Chief Economist

A resurgence in coronavirus cases across nearly all states and the weaker-than-expected October retail sales report released earlier this week puts the strength of the upcoming holiday shopping season in doubt.

We thought as folks gear up for their first, and hopefully last, coronavirus Thanksgiving, now would be a good time to share our holiday retail sales outlook for 2020.

The number of new COVID-19 cases began to rise sharply in mid-October and has become truly exponential over the past week. A new record-high number of cases on a 7-day moving average basis has been reached 26 consecutive days since October 24. This has resulted in many states backtracking on their in-person restaurant and bar reopenings, instituting new curfews between 10PM and 5AM, and placing stricter capacity constraints on businesses that have been allowed to stay open. The list of states and metro areas that are going down this road continues to increase. At least 18 states are undertaking one or more of these reopening roll-back strategies by our count, including California New Mexico, Oregon, Michigan, Washington, Wisconsin, New York, and Illinois just to name a few. Consumer driven small businesses that have been holding on by their fingernails over the past eight months are about to get challenged again with worsening financials and less government support.

U.S. retail sales already increased at its slowest pace since April last month. The labor market recovery is fading, adding to the coronavirus headwinds for many consumer service businesses. Nonfarm payroll gains moderated to 638,000 in October, the smallest monthly gain since job growth returned in May.

We forecast about 100,000 fewer net jobs will be created in November.

Looks like a Modest Holiday Sales Season Ahead

We expect a pretty modest holiday sales season this year. It will likely be neither a boom nor a bust for retail sales. We are forecasting retail sales growth for November and December of 2.9% from a year ago, down from a 4.4% increase over the same period in 2019. Moreover a lackluster retail sales gain as low as 1.0% can’t be completely ruled out, depending on how bad the coronavirus restrictions get by the end of the year.

Moderating income growth will weigh on consumer demand even as the coronavirus shutdowns keep tens of millions of more people at home. Less holiday travel and mall shopping, fewer holiday office parties, and declining consumer confidence could rob many retailers and restaurants of much needed profits this holiday season. Retailers are trying to salvage what they can with early Black Friday sales and numerous on-line deals to get people spending sooner and longer this year than we have seen in the past. So far in November, retail sales appear to be off to a respectable start, but an early start to the holiday shopping season could also mean an early end to the shopping season in December.

To find out more, check out this week’s U.S. Outlook Report.

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Another Better Than Expected Jobs Report For October

Scott Anderson
Chief Economist

The U.S. labor market recovery continued in October at a fairly rapid clip, though the pace of net job creation slowed for the fourth consecutive month to a gain of 638k jobs down from a 672k gain in September.

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Financial Stability Concerns On The Rise

Scott Anderson
Chief Economist

The most sobering section of the July Federal Open Market Committee Minutes, for me, was the description and discussion on financial system stability.

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Reopening Brings Back Millions of Jobs

Scott Anderson
Chief Economist

The June employment report came in on the hot side, beating most economists’ forecasts. The U.S. economy added another 4.8 million jobs in June on top of an upwardly revised 2.699 million jobs created in May. The better than expected job gains were likely driven by the reopening of big states like California that didn’t really begin opening up until late May and early June. 

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Personal Spending Rebound Falls Short of Forecasts

Scott Anderson
Chief Economist

What is the old phrase, you can lead a horse to water but you can’t make him drink? Using that analogy, the Federal Government and Federal Reserve have been pumping an unprecedented amount of water into our economy, trying to entice consumers back into stores and restaurants, and resume their old patterns of spending once businesses are able to reopen. That reopening started in nearly all 50 states in May and we got an important update on how it’s all going this morning with the release of the May Personal Income and Spending report from the Bureau of Economic Analysis.

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