Retail Sales Drop in June As Car Sales Falter

“This report only captures a small sliver on consumer spending, on restaurants and bars, but it misses all the travel,” she said.

As the back-to-school season approaches in September, Ms. Bovino expects more parents, who might have relied on unemployment benefits and tended to their children while they pivoted to remote learning, to rejoin the work force. That could help companies increase output and ease some of the shortages of supplies and products.

“I suspect we are going to see some of the supply constraints that businesses are facing right now ease come September,” she said.

Spending could also be affected by states withdrawing early from federal unemployment insurance programs, cutting off the $300 a week in aid that was added to benefits last year. Twenty-four states stopped paying the extended benefits, with most cutting off the aid in June, and an analysis by Bank of America based on credit and debit card spending showed that spending in states that ended the benefits saw a decline in consumer spending last week.

The states that withdrew the benefits have argued that the aid was discouraging people from seeking work when some businesses were trying to staff up as the economy reopens. Many economists say discontinuing benefits may end up hurting personal incomes more than they help address the worker shortage.

Ms. Bovino expects the child tax credit, which will provide all but the most affluent families up to $300 a month per child as part of the pandemic relief package, an extra lift to consumer spending. The size of the credit depends on a family’s income, the number of children and their ages.

“This could help give a cushion to those people who are unemployed as they find a job,” Ms. Bovino said.

Article source: https://www.nytimes.com/2021/07/16/business/june-retail-sales.html