Business

Retail spending unchanged in April even as more businesses reopened

Retail spending unchanged in April even as more businesses reopened

American shopping habits remained virtually unchanged last month, even as the pandemic eased and more businesses reopened, the feds said Friday.

Retail sales, which include purchases at stores, restaurants and online, remained flat in April compared with the prior month, according to data released by the Commerce Department.

That’s a huge slowdown from March, when retail spending rose a whopping 10.7 percent, largely fueled by the most recent round of stimulus checks that began to hit bank accounts that month. Economists expected retail sales to rise by another 1 percent in April, according to a Reuters survey.

While spending remained roughly flat in the US last month, many economists expect to see a shopping boom in the coming months as more businesses and activities resume and people continue to emerge from the pandemic.

An employee wearing a protective mask cleans a table in the shoe department at a Bloomingdale's Inc. store
Economists expected retail sales to rise by another 1 percent in April.
Bloomberg via Getty Images

There are several causes for optimism about the economic recovery. New unemployment claims have continued to drop, hitting a fresh pandemic low on Thursday. COVID-19 numbers continue to drop, as well, as vaccinations rise and governments increasingly lift restrictions on businesses and individuals.

On Thursday, the Centers for Disease Control and Prevention made the bombshell announcement that vaccinated people can take off their masks and don’t need to socially distance in most situations, including when indoors.

People walk by luxury retail stores in Manhattan
Economists expect to see a shopping rise in the coming months as more businesses resume and people continue to emerge from the pandemic.
Getty Images

However, there are reasons for patience, too.

Hiring fell far short of expectations in April, with the country adding just 266,000 new workers. That disappointing figure came despite data released earlier this week that showed vacancies reached a record high the month before.

An employee wearing a protective mask assists a customer at a Forty carrots frozen yogurt store at a Bloomingdale's store in New York.
An employee wearing a protective mask assists a customer at a Forty carrots frozen yogurt store at a Bloomingdale’s store in New York.
Bloomberg via Getty Images

Economists say that taken together, the data is an indication of a brewing labor shortage that threatens to hold back the US recovery just as it’s getting started. Sectors that were among the hardest hit by the pandemic, including hotels and restaurants, are among those struggling to recruit new workers. Several major companies have announced pay hikes in an effort to bring in labor.

shopping Manhattan
Hiring also fell far short of expectations in April.
SOPA Images/LightRocket via Getty Images

Business owners have largely blamed the labor shortage on pandemic-boosted unemployment benefits, which offer an extra $300 a week and make it harder for businesses to make private payroll more attractive than government paychecks. President Biden has defended the extra benefits, saying that people can’t turn down a good job and still collect the government money. But several states have already moved to end the federal program early.

support small businesses sign
Businesses and supply chains are struggling to meet the demand of customers eager to spend.
Getty Images

Economists say other factors, including a lingering fear of COVID-19 and child-care responsibilities amid closed schools, are also keeping workers home.

People shop at the Union Square Greenmarket in Manhattan.
People shop at the Union Square Greenmarket in Manhattan.
Billy Becerra/NY Post

Adding to concerns about a bumpy economic recovery are rising costs. Inflation rose at its fastest pace in 12 years for April, according to data released by the Labor Department earlier this week. Some of that rise was due to a tricky comparison with last year, when prices plummeted as businesses closed and people stayed home.

But the data is also a sign that costs are rising as businesses and supply chains struggle to meet the pent-up demand of customers eager to spend.

About the author

Erin Fox

From television to the internet platform, Erin switched her journey in digital media with News Brig. She served as a journalist for popular news channels and currently contributes his experience for News Brig by writing about the tech domain.

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