By Nathalie Voit
Despite a dismal August jobs report, the U.S. economy is faring better than many expected. The early scare prompted many to worry about the impact of the highly contagious delta variant on the economic recovery and whether the substantial gains made over the past months would suddenly come to a halt.
While hiring in the leisure and hospitality industry fell to zero in August, retail sales jumped precipitously, particularly in big online stores like Amazon. According to a Department of Commerce report, sales for U.S. retailers rebounded 0.7% in August, down from a steep decline in July. Compared to just one year ago, retail sales are now 15% higher.
Even more impressive are the gains made in the restaurant industry over the past year. Despite the stagnant figures from August, sales in restaurants have rebounded almost 32% from one year ago, according to The Wall Street Journal.
Nonetheless, many businesses are feeling the impact of the virus, albeit temporarily. Bill Jensen, co-owner of Reveler’s Hour, a pasta-and-wine bar in Washington, D.C. that operates entirely indoors, told The Wall Street Journal about the steep decline in business. According to Jensen, business at the restaurant has slowed down because many customers are afraid of contracting the delta strain, particularly parents with young children who haven’t been vaccinated. Business at its sister restaurant with outdoor seating, Tail Up Goat, has been faring well.
“We’re confident there’s a community of people and audience for this restaurant to sustain it long term,” Jensen said. “There’s just a lot that’s uncertain.”
The experience of business owners like Jensen points to the very real concerns everyday Americans may have about the economy. But despite the lackluster news from the restaurant sector, many economists believe the economic threat from the delta variant in early September was exaggerated.
“All in all, this was a solid showing by U.S. consumers, expected by no one, suggesting the economy continued to hum in August,” said chief economist Chris Low at FHN Financial.
“Households have plenty of income to spend,” said another economist, Stephen Stanley of Amherst Pierpont, a broker-dealer firm.
The Commerce report reveals a significant increase in spending on retail items like groceries, hardware, school gear, furniture, and electronics. According to MarketWatch, sales in almost every major retail category except for autos increased in August (auto dealers are currently suffering from a global semiconductor shortage that has all but frozen supply).
While restaurant sales are temporarily taking a hit, economists predict a swift recovery once coronavirus caseloads recede.
The retail sales report “is a reminder that consumers are resilient and willing to spend,” said lead U.S. economist Nancy Van Houten of Oxford Economics.
