The month of May posted a record increase in-store buying as people begin to come out of their homes where they were under lockdown for the better part of two months.
Retailers saw an increase in shopping by 17.7% in May as compared to April, helping revitalize a devastated economy that saw an 8.3% and 14.7% drop in spending in March and April, respectively. The renaissance has not completely reversed the negative trend, however. Spending is still down by 6.1% since this time last year.
Other indicators show a slow recovery from the mayhem the coronavirus caused to the US economy. Two and a half million jobs were added to the economy in May, but it is not clear if the trend is upward, or the economy will reach a low steady-state that becomes the country’s new normal.
“This may very well be the shortest, but still deepest, recession ever,” said Jennifer Lee, a senior economist at BMO Capital Markets. But she added that it’s “not likely that we’ll see a repeat in June as this is pent-up demand unleashed in one month.”
The surge in buying was fueled in large part by the $3 trillion the government sent out to individuals and businesses as a rescue package to keep the economy and households from complete ruin.
The possibility of a real recovery during the reality of a worldwide pandemic will depend on how willing people will be to shop, travel, mingle in crowds, and how many businesses stay open and hire or rehire workers.
“While the big increase in retail sales in May is encouraging, there is still a huge amount of uncertainty about the strength of the rebound,” said Gus Faucher, chief economist at PNC Financial Services. “It depends on a lot of factors outside of the economics.”