US retail sales fell in December for a third straight month, as surging COVID-19 infections saw consumers hunker down at home and hold tight to their wallets.
If there are any doubts remaining about what a bad month December was for the United States economy, look no further than the latest piece of dismal data.
US retail sales fell 0.7 percent in December from the previous month, the US Department of Commerce said on Friday.
The disappointing reading marks the third straight month of falling sales as surging COVID-19 infections and lapsing federal jobless benefits saw consumers hunker down at home and hold tight to their wallets.
The retail sales figures add to a mounting body of data showing that the US economic recovery slowed sharply in the final three months of 2020.
The economy lost 140,000 jobs in December, slamming the brakes on seven consecutive weeks of jobs gains.
That labour market weakness continued into January. Nearly a million workers filed for unemployment benefits with states last week, signalling that layoffs are rising as officials order business-sapping restrictions to curb COVID-19 infections.
A survey by the University of Michigan released on Friday also showed consumer sentiment slipped in the opening days of January.
But economists do see a stronger recovery on the horizon.
A virus relief aid package signed on December 27 includes $600 stimulus cheques for qualifying Americans, a $300 weekly federal top-up to state unemployment benefits through mid-March, and a fresh financial lifeline for small businesses.
Since that raft of measures was passed, the Democrats solidified their hold over both houses of Congress, making it easier for President-elect Joe Biden to enact his economic agenda.
On Thursday, Biden unveiled a proposal for a new, massive $1.9 trillion stimulus package that includes more funding for the nationwide vaccine drive and financial help for state and local governments.
Other measures include an additional $1,400 direct cash transfer to qualifying Americans, boosting the federal weekly top-up to state unemployment benefits from $300 to $400 and extending them through September.
“Looking ahead, the latest round of $600 checks, increased jobless benefits and aid to small business owners should give a welcome lift to income and support spending during the winter months,” Oxford Economics Senior US Economist Lydia Boussour said in a note to clients. “President-elect Biden’s ambitious fiscal agenda could further juice up household spending during the delicate vaccine rollout phase.”
Even though Democrats now control both houses of Congress, many analysts expect political horse-trading to chip away at the size and scope of Biden’s proposed stimulus.
Economists at Goldman Sachs led by Jan Hatzius expect Congress to enact $1.1 trillion “in additional fiscal support”.
Analysts at Capital Economics wrote in a note to clients on Friday: “Overall, we suspect that any eventual package will be worth no more than half of what Biden is calling for, and could take considerably longer to negotiate than many expect.”