Amid Rising COVID Cases, a Bad Stat for the Economy

Consumers cut back on spending more than expected in July
By Newser Editors and Wire Services
Posted Aug 17, 2021 10:35 AM CDT
Americans Cut Back Sharply on Spending
In this July 14, 2021, photo, pedestrians pass a Macy's store in Boston.   (AP Photo/Charles Krupa, File)

Americans cut back on their spending last month as a surge in COVID-19 cases kept people away from stores, per the AP. Retail sales fell a seasonal adjusted 1.1% in July from the month before, the Commerce Department said Tuesday. It was a much larger drop than the 0.3% decline Wall Street analysts had expected. The report offers the first solid glimpse of how the spread of the delta variant of COVID-19 may have changed the spending habits of Americans. At the end of July, the CDC began recommending that even vaccinated people start wearing masks indoors in public places. According to Tuesday's report, spending fell at stores that sell clothing, furniture, and sporting goods. At restaurants and bars, spending still rose nearly 2%, but the rate of growth has slowed from recent months before the delta variant spread.

Economists think Americans are also shifting their spending from goods to services, things like haircuts or vacations, which aren't included in Tuesday's report. And rising prices for everything from food to washing machines may have checked spending. The Commerce Department reported that even online sales have begun to slow, falling 3.1% from the month before. Companies have reported a slowdown after astronomical growth last year as people stayed home and shopped more online during the pandemic. EBay, for example, said its number of active shoppers slipped 2% to 159 million in its latest quarter. UPS said it's shipping fewer packages in the US. And Amazon, the world's largest online retailer, said online sales grew 13% in its most recent quarter, the company's smallest quarterly online sales growth in two years.

(More consumer spending stories.)

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