US retail sales roared back from record losses last month as states eased coronavirus lockdowns and stores reopened, new data show.
Retail and food service sales surged a record 17.7 percent to $485.5 billion in May after plunging 14.7 percent in April amid pandemic restrictions that shut shoppers in their homes, the US Department of Commerce said Tuesday.
“This is looking like the shortest economic recession in history if consumer expenditures are the relevant guide to the economy’s fortunes,” said Chris Rupkey, chief financial economist at MUFG Union Bank. “There’s no second wave fears for consumers at all.”
The spike shattered economists’ expectations for an 8 percent month-to-month increase, which still would have been the largest on record. The previous high of 6.7 percent was set in October 2001 following the 9/11 terrorist attacks.
But last month’s sales were still down about 6.1 percent compared to May 2019 and about 8 percent lower than the $527 billion recorded in February, before the coronavirus upended the US economy.
Some of the largest spikes came in industries hit hard by the lockdowns such as clothing and accessories stores, whose sales surged 188 percent last month after plunging 75.2 percent in April, according to the feds. And restaurant and bar sales climbed 29.1 percent following a nearly 35 percent drop in April.
“A lot of businesses need to open to survive,” said Jim Swift, founder and CEO of Cortera, which tracks spending by small and medium-sized US businesses. “Restaurants aren’t going to make it, clothing stores aren’t going to make it if they don’t open fast and get people in their stores.”
The surge in retail sales came in the same month that the US added a record 2.5 million jobs, thanks in part to the lifting of restrictions aimed at controlling the deadly virus.
Despite the promising data, experts have warned that the US faces a long climb back from the worst economic downturn since the Great Depression. The Federal Reserve expects the nation’s gross domestic product to shrink 6.5 percent this year, followed by a 5 percent increase in 2021.