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The retail sector has shown signs it has withstood the effects of the coronavirus pandemic despite volatility in the overall economy, an expert detailed Nov. 19.
“Our economy has certainly improved considerably,” National Retail Federation Chief Economist Jack Kleinhenz said during a virtual panel discussion. “The recovery has been uneven because we had significant pullback in the second quarter and an unbelievable rebound in the third quarter. I don’t expect the fourth quarter to be like any of the two previous quarters.”
The panel discussion, part of the virtual 2020 NAFC Annual Conference, highlighted trends in the retail space. The National Accounting & Finance Council event brings together experts from sectors that pertain to trucking. NAFC is a division of American Trucking Associations.
“We’ve seen a lot of momentum that has come into the economy from consumers,” Kleinhenz said. “They represent two-thirds of the economy, and retailing has been a very important part of the household purchases these last couple of months and we know there is a lot going on in housing. The consumers are becoming more optimistic about the future. but you know it’s very uneven.”
The U.S. Census Bureau recently reported advance estimates for retail and food service sales increased 0.3% month-over-month to $553.3 billion in October. That represents a 5.7% increase from a year ago.
“Most people were focusing in on the month-to-month numbers,” Kleinhenz said. “I would argue it’s very difficult to look at it on a month-to-month basis because of seasonality data factors that have to be applied. I’m not sure how the [U.S. Census Bureau] is even doing it given the unevenness of this economy.”
Kleinhenz pointed to some factors that are helping to drive retail sales. The first is consumer spending shifting from services in favor of retailers. E-commerce sales also are spurring spending.
A solid housing market is helping as well.
“We had existing home sales that came out relatively strong,” Kleinhenz said. “Auto sales have been good. So big-ticket items have been important to the economy. The most recent data on manufacturing has also been positive, and orders are up and that has helped.”
The latest University of Michigan Consumer Confidence Index, released Nov. 13, showed consumer sentiment about the economy was positive at 80.4%. Consumer expectations also were strong at 75.6%.
“Going into this pandemic, I would just like to point out there was a healthy balance sheet prior to the recession,” Kleinhenz said. “That is helping to carry us forward. Personal incomes actually ticked up a little bit at 6.9% on a year-over-year basis this past September. We’ll get another reading in a couple weeks for October.”
He added that part of that is carryover from stimulus benefits, but he indicated job gains and wage increases have helped, too. Despite this, consumption is down, Kleinhenz noted, largely because of limited spending in some sectors.
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