WASHINGTON—Retail sales continued to rise in July, surpassing pre-pandemic levels, as part of a rebound that indicates the country’s economy is on track for a V-shaped recovery, according to President Donald Trump.
“We had such a strong foundation that we’re recovering much faster than anybody anticipated. It turns out that it will be a very, very strong V,” Trump told reporters on Aug. 15.
“We’re currently witnessing the fastest economic recovery in American history,” he added.
U.S. retail and food services sales in July rose 1.2 percent from the previous month. The three consecutive months of sustained recovery boosted retail sales above levels seen before the pandemic took its toll on the U.S. economy, and 2.7 percent above year-ago levels.
According to Scott Anderson, chief economist at Bank of the West, U.S. consumers are “spending like there is no tomorrow.”
“The retail sales report for July reveals a remarkable rebound in retail sales has occurred over the last three months, as the U.S. economy reopened for business and government transfer payments bolster consumer confidence enough for consumers to return to the stores with a vengeance,” he stated in a report.
Some of the spending in recent months especially in electronics, autos, and furniture, according to Anderson, could be bolstered by “rocketing stock market prices, declining interest rates, and pent-up consumer demand.”
The number of Americans filing jobless claims also fell below 1 million for the first time since the height of the pandemic lockdowns in March, according to Labor Department data released on Aug. 13.
While the U.S. economic data shows clear signs of recovery, economists warn that potential resurgence in coronavirus cases and the high unemployment rate could weigh on consumer confidence and spending in the coming months. The unemployment rate has been falling but is still at 10.2 percent.
“Surveys show more and more Americans are relying on government support to meet their daily expenses. This vulnerability could become an Achilles heel for consumer spending and the U.S. economic recovery in the fourth quarter,” Anderson wrote.
Congressional and White House negotiators failed to reach a deal on the next stimulus package, leading to the expiration of the $600 weekly enhanced unemployment benefit. Trump signed an executive order on Aug. 8 to renew the extra benefits at $400 per week.
The Committee for a Responsible Federal Budget estimated that the funding for this program would run out in five weeks if claims continue at around the current level.
According to a report by Matthew Luzzetti, chief U.S. economist at Deutsche Bank, the expiration of unemployment benefits is likely to weaken consumer spending, particularly for lower-income households.
“Google mobility data indicate that since the end of July, foot traffic around retail has underperformed in states that were more likely to be impacted negatively by the expiration of these benefits,” Luzetti stated.