Total 2020 retail sales in the US are forecasted to drop 10.5%. That’s despite good news this week that US retail sales were up 18% in May, a staggering figure considering the state of the world economy over the last three months.
This is complicated by new data showing who’s NOT doing most of the purchasing. Since January, the wealthiest 25% of Americans are no longer buying the way they did before the pandemic, resulting in two-thirds of the overall drop in spending.
“For higher-income individuals, that spending is still way far off from where it was prior to COVID, and it has not recovered as much,” says Nathan Hendren, a Harvard economist and co-founder of the Opportunity Insights research team.
Dropping to $4.894 trillion (below total retail sales in 2016), the 10.5% decline is greater than the 8.2% drop the country suffered in 2009. Many economists believe that the earliest US retail will rebound will be 2022.
The one bright spot for the US is that e-commerce sales are projected to beat the 13% forecast and rise to 18% by the end of the year.
eMarketer principal analyst Andrew Lipsman comments, “Everything we’re seeing with e-commerce is unprecedented, with growth rates expected to surpass anything we’ve seen since the Great Recession. Certain e-commerce behaviors like online grocery shopping and click-and-collect have permanently catapulted [commerce] three or four years into the future in just three to four months.”