Retail sales begin recovery
Retail sales continued to recover in June from a steep drop earlier in the year when many businesses across the U.S. were closed as part of the pandemic lockdown.
Total retail sales were up 7.5% in June from the previous month, according to the Advance Monthly Sales report from the Department of Commerce issued July 16. However, total retail sales for the 3-month period of April through June were down 8.1% from the same period a year ago.
Automobile sales continued to rebound in June, up 8.2% from the previous month, and up 7.5% from a year earlier. Electronics and appliance stores also continued a strong recovery, up 37.4% from the previous month, but still down 12.7% from the same period a year earlier.
With many bars and restaurants reopening, food services and drinking places were up 20.0% from the previous month, but still down 26.3% from a year earlier.
Non-store retailers (primarily online), which experienced strong growth early in the pandemic, saw a small decline in June of 2.4% from the previous month. However, sales were still up 23.5% from the same period a year earlier.
Unemployment remains high
Although many Americans have returned to work, the high rate of new unemployment claims has persisted. According to the Department of Labor, in the week ending July 25, a total of 1.43 million new unemployment claims were filed, which was slightly higher than the previous week’s total of 1.42 million claims.
The advance seasonally adjusted insured unemployment rate was 11.6% for the week ending July 18, an increase of 0.5% from the previous week. In all, more than 50 million American workers have filed for unemployment during the Covid-19 pandemic.
GDP drops as economy contracts
Amidst the pandemic lockdown, GDP decreased at an annual rate of 32.9% in the 2nd quarter following a 5.0% decline in the 1st quarter, according to the advance estimate released by the Bureau of Economic Analysis on July 30. The largest decline in GDP prior to this was a 10% decline in 1958. The government began tracking GDP growth in 1947.
According to the report, the decrease in GDP reflected decreases in personal consumption expenditures, exports, private inventory investment, nonresidential fixed investment, residential fixed investment, and state and local government spending.
The U.S. dollar has also been reeling versus other currencies. The U.S. Dollar Index, which measures the dollar against a basket of leading currencies, lost 4.14% in July, its largest monthly drop since September 2010. It is down about 10% from its peak in March. The decline has been attributed to a variety of factors, including the severity of the pandemic in the U.S., the massive infusion of money into the economy by Congress and the Fed, and geopolitical tensions between the U.S. and China.
Most sectors gain in July
All but one of the 11 sectors of the S&P 500 index made gains in July. The Energy sector was the only one with a loss, down 5.13% for the month. Energy is down 38.65% through the first seven months of 2020.
Consumer Discretionary was up 9.0% in July, followed by Utilities, up 7.81%, Materials, up 7.07%, and Consumer Staples, up 6.97%.
The chart below shows the results of the 11 sectors for the past month and year-to-date: