Will Strong US Consumer Demand in September Yield to Cool Winter Prospects?

(26 October 2020) Consumer demand has bounced back quickly from the depths of the corona-crisis to reach $548.3 billion in September, a substantial 5.4 percent over September 2019, according to US Census Bureau. When you consider that consumer demand accounts for nearly 70 percent of US GDP, you can understand why this would breath fresh optimism into broad recovery of economic activity. 

• In September, sales of many retail businesses exceeded pre-crisis levels. Only gasoline, food services, clothing, and electronic stores remain well below January 2020 levels. Gasoline stores ended the month with sales 18.2 percent below January levels in part because of depressed fossil fuel prices but also with lesser foot traffic through attached convenience stores. Food services and clothing sales have suffered mainly due to anti-covid restrictions and remains hindered by COVID-19 surges. 
• COVID-19 gave a boost to online spending and outdoor activities vendors. During the first nine months of 2020, sales of non-store retailers, building materials and gardening equipment dealers, and food stores increased from 12 to 20 percent year over year.

Despite the encouraging September figures, further expansion of US consumer demand is simply uncertain. Total new daily case numbers nationwide have hit new daily records and stimulus funds have expired, pushing consumers to reconsider spending decisions and activities outside the home even though recent research showed that consumers have so far spent less than 10 percent of total stimulus benefits. A survey on winter holiday spending plans from Prosper Insights and Analytics also points to sluggish winter holiday spending compared to last year.