Retail sales in the United States fell in December for a third straight month, as the surge in COVID-19 infections saw consumers curl up at home and stick to their wallets.
If there are any doubts that December will be bad for the US economy, look no further than the latest dismal data.
US retail sales fell 0.7% in December from the previous month, the US Department of Commerce said on Friday.
The disappointing reading marks the third consecutive month of declining sales as the surge in COVID-19 infections and the expiration of jobless federal benefits saw consumers curl up at home and hold onto their wallets.
Retail sales figures add to a growing body of data showing that the U.S. economic recovery has slowed sharply in the last three months of 2020.
The economy lost 140,000 jobs in December, dampening seven straight weeks of job gains.
This weakness in the labor market continued into January. Nearly one million workers filed for unemployment benefits from states last week, signaling layoffs increasing as authorities order restrictions that undermine business to curb COVID-19 infections.
A University of Michigan poll released Friday also showed consumer sentiment waned in the early days of January.
But economists see a stronger recovery on the horizon.
A virus aid package signed on Dec. 27 includes $ 600 stimulus checks for eligible Americans, a $ 300 weekly federal top-up to state unemployment benefits through mid-March, and a new lifebuoy. financial bailout for small businesses.
Since this series of measures was passed, Democrats have consolidated their grip on both houses of Congress, making it easier for President-elect Joe Biden to carry out his economic agenda.
On Thursday, Biden unveiled a proposal for a massive new $ 1.9 trillion stimulus package that includes more funding for the national immunization campaign and financial assistance to state and local governments.
Other measures include an additional direct cash transfer of $ 1,400 to eligible Americans, increasing the federal weekly top-up to state unemployment benefits from $ 300 to $ 400 and extending it through September.
“Looking ahead, the latest round of $ 600 checks, increased unemployment benefits and help for small business owners should boost incomes 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 budget plan could further increase household spending during the delicate phase of vaccine deployment.”
Even though Democrats now control both houses of Congress, many analysts expect the political haggling to reduce the scale and scope of the stimulus proposed by Biden.
Goldman Sachs economists, led by Jan Hatzius, expect Congress to enact $ 1.1 trillion in “additional budget support.”
Capital Economics analysts 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 asking for and could take significantly longer to negotiate than what many think. “