Retail sales rose to a record level in July, recovering what was lost in the pandemic, but the gains are at risk because of the failure of Congress to agree to a new fiscal stimulus package.
Retail sales were up 1.2% to a record level in july, and were stronger than expected when excluding vehicle sales.
Keith Cunningham from South Carolina shops for Walt Disney apparel at the Bargain World gift shop located near Walt Disney World where its conducting a phased reopening from coronavirus disease restrictions in Lake Buena Vista, Florida, July 11, 2020., recovering what was lost in the pandemic, but the rebound in consumer spending is at risk because of the failure by Congress to agree to a new fiscal stimulus package.
Diane Swonk, chief economist at Grant Thornton, said she is not raising her forecast for third quarter GDP because of the strong data. She is waiting to see what happens in August, when the unemployed no longer received the extra funds. Critics point to studies showing 70% of the recipients were receiving more than their normal salaries, and some economists say part of the decline in people collecting unemployment claims may have to do with the fact that workers returned to their jobs when the extra payments ran out.
General merchandise stores were down 0.2% from June. "That's a window into retail spending more broadly. The fact that was still struggling indicates that this V might turn into a W unless the consumer gets some help," said Zandi.
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