The coronavirus delta variant took a bite out of the U.S. economy in August, but the new strain didn’t do much damage.
A survey of retailers shows sales rose strongly last month except for a few categories that have been most affected by the pandemic.
Take restaurant receipts. They barely rose in August after five straight months of soaring sales.
The fast-spreading strain of the coronavirus made some people stay home last month and cancel plans, such as dinner reservations, airline trips and hotel stays.
But delta didn’t stop them from spending.
Instead, Americans spent more on goods. Grocery receipts, for example, jumped 2% and rose at the fastest pace in a year and a half.
“Consumers are shifting their spending back to goods from services in light of the rise in Covid cases and hospitalizations,” said chief economist Scott Anderson of Bank of the West.
Even with flat sales in August, however, restaurant receipts have risen at a nearly 10% annualized rate through the first eight months of 2021.
What’s more, sales are likely to accelerate again if the spread of the delta variant continues to slow. The caseload appears to have peaked.
“I look for the consumer to get right back to it in October, by which time the delta wave should be in full retreat,” said chief economst Stephen Stanley of Amherst Pierpont Securities.
The strong increase in August retail sales partly offsets worries about the economy after a weak employment report in August. The U.S. added only 235,000 new jobs and zero in the service industry — businesses like restaurants, theaters and casinos with the most face-to-face contact with customers.
The problem is not a lack of customer demand, as the increase in retail sales show. Americans still have plenty of money to spend because of high savings, rising wages and leftover federal stimulus funds.
The problem is that millions of Americans are still too afraid to go back to work. The result is a major labor shortage that’s handcuffing the ability of businesses to produce enough goods and services to keep up with demand.
Even with a raft of strong economic data, U.S. stocks
fell in Thursday trading. An improving economy is expected to spur the Federal Reserve to cut back on measures that have stoked economic growth and helped boost equity prices.