Covid Crimps Retail Sales – January 19, 2021
New daily Covid cases spiked higher in the fall and have remained elevated, according to data from Johns Hopkins. At over 200,000 per day, cases are roughly triple the modest spike we experienced last summer.
Sadly, deaths in the U.S. have also risen. Recently, daily deaths topped over 4,000 per day from the virus.
Vaccines have been developed that are highly effective against the current strains. But the rollout has been slow, and lockdowns have increased, restricting business activity and forcing a new round of layoffs.
On a nonseasonally adjusted basis, weekly initial jobless claims rose above 1 million in the week ended January 9, according to the Dept. of Labor. It’s the first time claims for unemployment insurance have been above 1 million since late July. One year ago, claims were hovering near 200,000.
We’re also seeing an impact on retail sales. December sales fell 0.7%. Exclude the 1.9% rise in auto sales, and sales fell a steep 1.4%. Excluding autos and gasoline station sales, which were aided by higher prices at the pump, sales fell a sharp 2.1%.
While one bright spot has been autos, most categories have struggled recently. Note that sales in the major categories have been down for three straight months.
In part, it’s—
- government restrictions and the high level of layoffs,
- increased fear of going into public places, and
- uncertainty regarding the economy and the desire to boost savings.
Meanwhile,
- fiscal stimulus released early in the year is running low, and
- the number of people employed remains well below pre-Covid levels.
Yet, investors are still assuming that any economic weakness will be short-lived. A still strong housing industry and manufacturing sector continue to lend support.
Created 2021-01-19 21:06:37