November retail sales among a cohort of retail sectors followed by Retail Dive rose 10.3% year over year, according to numbers released Wednesday by the U.S. Department of Commerce. The results reflect what GlobalData Managing Director Neil Saunders deemed a "respectable rate of growth," especially considering that retailers have been quite successful in getting consumers to begin their holiday shopping earlier this year.
The same cohort saw spending rise 10.7% from October, compared to its 13.7% month-to-month rise last year.
"While it is true that November totals came in modestly below those of October, most of this is because patterns of trade shifted," Saunders said in emailed comments. "This year, more consumers brought forward spending as retailers offered Black Friday deals earlier than ever before. This distorted the trading calendar, dragging some of November's spend into October."
Still, analysts warned that the report shows how much the federal government's failure to renew fiscal support is weighing on consumers. A more modest October-to-November decline was expected, according to Robert Frick, corporate economist at Navy Federal Credit Union.
"Holiday shopping couldn't help retail sales in November, as they dropped far more than forecasts predicted," Frick said in emailed comments, noting that October's results were also revised downward on Wednesday. "These are the first drops since April, and without stimulus, retail sales declines will likely continue and perhaps become severe given millions of Americans will lose unemployment benefits the day after Christmas."
Just before the U.S. election prospects for a new pandemic relief bill seemed dim, but Wells Fargo economists on Wednesday noted that key lawmakers this week sounded "strikingly upbeat" and "seemed in agreement that Congress would not leave for the holidays until a deal was struck on COVID relief."
In the meantime, retailers should brace themselves for consumers to grow increasingly more wary of spending, especially those already worried about their jobs, observers said. The U.S. economy has shed nearly 10 million jobs since February, and consumers in recent weeks have demonstrated heightened levels of bargain hunting. Consumer sentiment, which had been steady for two years, "in the last few months … has dropped significantly," according to an emailed report from Prosper Analytics. December's consumer confidence stands at 39.4%, down from 54.1% in 2018, according to that report.
The promise of a vaccine has shone light at the end of the tunnel, since it's the pandemic that has damaged the economy, and retailers are likely to eventually benefit from pent-up demand and newfound consumer confidence, according to Jim Baird, Chief Investment Officer at Plante Moran Financial Advisors.
"In the interim, fiscal support for sidelined workers will be critical to the growing number of households that are expected to be impacted as business conditions slacken and layoffs increase," Baird said in emailed comments.