US retail sales rose less than expected in October as the economic recovery slowed
retail salesincreased 0.3% in October, coming in below the consensus economist estimate of 0.5%.
- Spending at retailers also contracted from the month prior as lead-in to the holiday season squared off with soaring COVID-19 case counts.
- The reading still marks a sixth straight monthly improvement, although its still a sizable drop from September's 1.6% expansion.
Americans spent less at retailers than expected in October as the economic recovery decelerated amid a worsening pandemic.
Any slowdown would have serious effects on the broad recovery. Retail spending accounts for 70% of economic activity, and after record gross domestic product growth in the third quarter, growth is expected to slow significantly through the end of the year. The next few months also mark a make-or-break point for retailers, as the holiday season fuels the busiest spending months of the year.Spiking COVID-19 cases place critical fourth-quarter spending at serious risk. The US reported 148,532 new cases on Monday, bringing the total number of infections above 11 million, according to The COVID Tracking Project. Hospitalizations surpassed 73,000 and deaths neared 240,000.
Cities began announcing new lockdown measures earlier in November, and early readings from consumer sentiment gauges show Americans quickly growing more pessimistic toward the US economy's future.Read more: Barclays details its ultimate strategy for picking stay-at-home market winners for a post-COVID world — and shares 2 stocks all investors should own before the recovery accelerates It's unlikely any stimulus aid will help offset the drop in consumer confidence. President Donald Trump urged Congress to pass a "big and focused" relief bill in a Saturday tweet, but major areas of difference remain between Democrats and Republicans.
White House negotiations with Democrats on a new package dissolved ahead of November's elections. Senate Majority Mitch McConnell now leads talks on stimulus, and his prior calls for a $500 billion bill square off with Democrats' urges for a sweeping $2.2 trillion measure.
A Biden administration may be able to reach a compromise, but that punts stimulus into the new year. Americans may need to wait through the holiday season and the virus's deadliest wave yet before seeing new fiscal support.Read more: GOLDMAN SACHS: Buy these 20 deeply underpriced stocks now before the recovery helps them rebound and crush Wall Street's low expectations in 2021
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