The Commerce Department reports that U.S. retail sales surged by a record 17.7 percent in May over the previous month, in part due to a rebound in consumer spending caused by the coronavirus recession, which caused many businesses to close or limit business.
The Associated Press reports that “retail sales have retraced some of the record-setting month-to-month plunges of March (8.3%) and April (14.7%) as businesses have increasingly reopened. Still, the pandemic’s damage to retail sales remains severe, with purchases still down 6.1% from a year ago.”
The changes have in many cases intensified the financial strain on traditional physical stores and boosted online purchases. Sales at non-store retailers, which include internet companies like Amazon and eBay, rose 9% in May after posting growth of 9.5% in April. Clothiers achieved a stunning 188% monthly gain, but that was not enough to offset a 63.4% drop over the past 12 months.
Retail sales account for roughly half of all consumer spending, which fuels about 70% of total economic activity. The rest of consumer spending includes services, from cellphone and internet contracts to gym memberships and child care.
Last month’s bounce-back comes against the backdrop of an economy that may have begun what could be a slow and prolonged recovery. In May, employers added 2.5 million jobs, an unexpected increase that suggested that the job market has bottomed out.
The bounce in May’s retail numbers suggests that the worst of the coronavirus recession is behind us.
In response to the retail sales recovery, the Dow surged 700 points.
U.S. stocks surged higher early Tuesday and are looking to extend the previous day’s gains, partly boosted by better-than-expected data on retail sales and a report of a potential therapeutic for patients with severe COVID-19 symptoms.
Stocks had already been buoyant amid reports that President Donald Trump is backing a $1 trillion infrastructure spending package to add more fiscal stimulus to help the economy recover from the coronavirus pandemic.
This is exactly what Democrats are hoping to avoid.
Matt Margolis is the author of Trumping Obama: How President Trump Saved Us From Barack Obama’s Legacy and the bestselling book The Worst President in History: The Legacy of Barack Obama. You can follow Matt on Twitter @MattMargolis