24 Nov Good signals for retailers during uneven recovery
The retail sector has shown signs of resisting the impact of the coronavirus pandemic amid instability in the overall economy, a comprehensive Nov. 19 specialist.
“Our economy has certainly improved considerably,” said National Retail Federation Chief Economist Jack Kleinhenz during a panel discussion. “The turnaround was inconsistent because we had a major second quarter pullback and an amazing third-quarter rebound. I don’t expect the fourth quarter to be like any previous quarter.”
The panel discussion, part of the NAFC Annual Meeting, highlighted developments in retail space. Global Accounting & Finance Council event brings together experts from trucking industries. NAFC is American Trucking Organization.
Supply chain demands
“We’ve seen much momentum coming from consumers into the economy,” Kleinhenz said. “We constitute two-thirds of the economy, and retailing has been a very significant part of household transactions these last few months, and we know a lot is happening in housing. Consumers become more positive about the future. But you know it’s uneven.”
Recently, the U.S. Census Bureau announced a month-over-month rise in retail and foodservice projections to $553.3 billion in October. That’s a 5.7 percent year-on-year rise.
“Most people focused on month-to-month numbers,” Kleinhenz said. “I would claim that looking at it on a month-to-month basis is very complicated due to seasonality data considerations to be applied. I’m not sure how [U.S.]. Census Bureau] does this even amid this economy’s unevenness.”
Kleinhenz pointed to factors that help boost retail sales. Second, consumer spending moves from utilities to stores. E-commerce revenues also spur investment.
A solid housing market also benefits.
“We had relatively strong home sales,” Kleinhenz said. “Autosales were fine. Big-ticket products were critical to the economy. Again the latest manufacturing data was positive, and orders are up and that helped.”
The new University of Michigan Consumer Confidence Index, published Nov. 13, showed an optimistic consumer feeling about the economy at 80.4%. Market expectations were also 75.6% high.
“Before the recession, I would just like to point out that there was a healthy balance sheet,” Kleinhenz said. “That helps move us forward. Personal income actually ticked up at 6.9 percent year-over-year this past September. We’ll have another October reading in a few weeks.”
He added that part of that is conveying stimulus benefits, but he also suggested employment growth and wage rises helped. Nevertheless, consumption is down, Kleinhenz noted, mainly due to reduced investment in some sectors.