U.S. retail sales rose more than expected in June as consumers bought big-ticket items like motor vehicles and dined out, but a resurgence in new COVID-19 cases is chipping at the budding recovery, keeping 32 million Americans on unemployment benefits.
Economists attributed the second straight monthly increase in retail sales reported by the Commerce Department on Thursday to the government’s additional weekly $600 checks for the unemployed, a benefit that is set to end on July 31. The expiration of the program will leave millions of gig workers and the self employed among others, who do not qualify for regular state unemployment insurance, without an income.
Retail sales rose 7.5% last month after jumping 18.2% in May, which was the biggest gain since the government started tracking the series in 1992. Economists polled by Reuters had forecast retail sales advancing 5% in June.Retail sales have rebounded as businesses resumed operations after being shuttered in mid-March in an effort to slow the spread of the respiratory illness. Retail sales in June were driven by an 8.2% increase in receipts at auto dealerships.
FILE PHOTO: People line up outside Kentucky Career Center prior to its opening to find assistance with their unemployment claims in Frankfort, Kentucky, U.S. June 18, 2020. REUTERS/Bryan Woolston “Activity snapped back in May and June, albeit to levels below those which prevailed prior to the pandemic,” said Michael Feroli, chief U.S. economist at JPMorgan in New York. “More recently, several high-frequency indicators suggest that May and June were the easy months, and that the resurgence of COVID-19 cases is leading to slower activity gains in July.”
First-time claims peaked at a historic 6.867 million in late March. They remain roughly double their highest point during the 2007-09 Great Recession. Including a program funded by the government, 2.23 million people filed claims last week.
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