Consumer spending increased for a fifth straight month in September, though the recovery in the battered retail sector remains halting as Americans continued to struggle with high unemployment and waning confidence in the economy.
Retail sales rose 1.9 percent, the Commerce Department said on Friday.
Much of the spending last month, economists say, was likely driven by white-collar workers whose economic fortunes have remained relatively stable during the coronavirus pandemic, while consumers at the lower end struggled with high unemployment of 7.9 percent.
“We are still at one of the highest unemployment rates of any recession since 1948,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “I don’t think we can celebrate.”
The early weeks of the pandemic were disastrous for retail sales, which dropped 8.3 percent in March and then fell 16.4 percent in April. Sales bounced back strongly in May and June, when stores reopened from lockdowns, but growth has since slowed. Sales rose 0.6 percent in August, after a 0.9 percent gain in July.
Weighing on consumer spending has been the failure of Congress and the Trump administration to extend additional financial assistance to jobless Americans, after the weekly $600 subsidy ended in July.
Even though stimulus money has dried up, consumers have benefited from a $13.6 trillion savings buffer that accumulated from April through August, economists for Morgan Stanley wrote in a note last week.
But spending could take a hit based on how the labor market recovers and as uncertainty lingers around the upcoming presidential election and the timeline of a vaccine.
Conditions for the upcoming holiday shopping season look increasingly dim, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note on Wednesday.
“We’re becoming very nervous about Q4 and, especially, the holiday season, in the likely absence of new fiscal stimulus,” he wrote. “Household incomes are now falling, at the most important time of year for retailers.”
The Business Roundtable, a group of chief executives of major U.S. companies, announced on Thursday initiatives meant to advance racial equity and justice and to reduce the “economic opportunity gap in communities of color.”
The group said it hoped to:
Give $1 billion to community lending institutions, which provide funds for Black households and small businesses, by 2025.
Give $600 million in financial contributions to provide Black- and Latino-led Minority Depository Institutions with capital and deposits, by 2025.
Set up a system to mentor and support Black and Latino small-business owners, with a goal of reaching 50,000 businesses over the next five years.
“The racial inequities that exist for many Black Americans and people of color are real and deeply rooted,” Doug McMillon, president and chief executive of Walmart and chairman of the Business Roundtable, said in a statement. “These longstanding systemic challenges have too often prevented access to the benefits of economic growth and mobility.”
PepsiCo, a member of the Business Roundtable, said on Wednesday that it was committing more than $170 million over five years to support initiatives to “empower Hispanic Americans.” The company said it would expand Hispanic managerial representation to 10 percent of the company’s work force by 2025 by hiring 120 Hispanic managers, including 50 executives.
Every airline is struggling, but each struggles in its own way.
United Airlines relies far more than its rivals on international travel, which is expected to take far longer than domestic travel to bounce back. So the airline is fine-tuning its business, from maintenance to flight planning, as it tries to predict where a wary public will fly, reports Niraj Chokshi.
“We can really throw away the crystal ball, which was hazy to begin with,” said Ankit Gupta, United’s vice president for domestic network planning.
When the virus devastated travel in March and April, United took hundreds of planes out of circulation. Since July, it has brought back more than 150, including those flown by regional carriers, but about 450 are still stashed away.
To understand when and how demand might recover, United is tracking indicators like national travel restrictions, the travel habits of dual citizens and the economic ties between countries. “It’s a bit of gut feeling, to be quite candid,” said Patrick Quayle, who oversees the airline’s international network planning.
Most of the people still flying are staying within the country, visiting friends and relatives or vacationing outdoors. So the airline is gauging how many flights to add to snowy destinations, while adding winter service to Florida from the Northeast and the Midwest. It also plans to expand service on dozens of routes to tropical destinations near and within the United States.
Whatever happens in the months to come, said Tom Doxey, United’s senior vice president for technical operations, “we have a plan in place.”