U.S. retail sales continued to decline for a third straight month, with renewed measures to prevent the spread of the COVID-19 virus resulting in shutdowns and job losses.
According to data released by the Commerce Department on Friday, retail sales were down by 0.7 percent last month. Retail sales for the month prior were also lower than previously projected. Data for November, which first showed sales declining by 1.1 percent, was revised to 1.4 percent.
Monthly sales were down 4.5 percent at restaurants, with cities across the country banning indoor dining over the holidays. Online sales were down by 5.8 percent and sales at electronics and appliance stores were down by 4.9 percent.
A decline in consumer spending also negatively impacted sales of sporting goods, hobby, books stores, musical instruments and beverage stores. Meanwhile, auto dealerships saw a 1.9 percent rebound in sales and clothing stores saw a 2.4 percent increase in sales. Building material stores and health and personal care stores also reportedly saw an improvement in sales.
Fortunately, the downturn in retail sales is unlikely to lead the economy back into recession as production at factories has been accelerating since last month, Reuters reported. The $1.9 trillion economic relief that is expected to be offered by the incoming Biden administration is also likely to help stabilize the economy and generate momentum in the retail market.
“There were plenty of culprits ruining the holiday spirit, including a frightening health situation, rising layoffs, and a looming lapse in jobless benefits,” said Lydia Boussour, a senior U.S. economist at Oxford Economics told Reuters. “Biden’s ambitious fiscal agenda could juice up household spending during the delicate vaccine rollout phase.”