Loss of stimulus aid, rising virus cases hit consumer spending, retail sales in US

*Retail sales suffering in absence of second pandemic relief package, and it looks like consumer spending is increasingly turning into a headwind for this recovery from the worst economic downturn since the Great Depression ─Economists

Isola Moses | ConsumerConnect

As the death rate resulting for the damaging Coronavirus (COVID-19) pandemic increased to 251, 059 in the United States (US) Wednesday, November 19, 2020, hospitalisations have surged, while the lack of a second COVID-19 relief package is already taking a toll on consumer spending and retail sales in the developed economy.

ConsumerConnect gathered that retail sales increased earlier this week, less than expected in October just 0.3 percent, according to the Commerce Department.

Sales could slow even further due to the high impacts of the second wave of COVID-19 infections and unemployed Americans’ loss of Federal aid package, agency report stated.

President-elect Joe Biden in the week had called on the Congress to pass another COVID-19 relief package.

However, experts say that’s unlikely to happen before the end of the year, according to report.

Chris Rupkey, Chief Economist at MUFG, in New York, told Reuters that “it looks like consumer spending is increasingly turning into a headwind for this recovery from the worst economic downturn since the Great Depression.

“Fed officials are saying they might have to do more and today’s data may turn that thinking into a reality.”

In respect of the loss of aid and rise in cases, it was learnt that a large number of unemployed and underemployed workers are set to lose benefits in December 2020, when the six-month period of eligibility for government funded programmes ends.

The rise in daily new COVID-19 cases has prompted state governors, many businesses to impose new Coronavirus restrictions, and many consumers may be reverting to a place of caution in light of the continued surge in infections.

However, economists expect “moderate retail sales growth” for the rest of 2020, according to Reuters.

Joel Naroff, Chief Economist at Naroff Economics in Holland, Pennsylvania, stated: “The reopening of businesses has been the key to keeping income gains up, but the resurgence of the virus is putting that into question.

“Manufacturing can only hold up if households keep buying and they need income to do that.”

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