U.S. Retail sales rebounded in May after April’s record drop

National retail sales rebounded in May as thousands of stores and restaurants reopened after lockdowns were lifted and federal stimulus checks and tax refunds fueled a burst of spending. But many of the stores and restaurants that welcomed back customers last month did so with fewer employees, reflecting a permanently altered retail landscape and an ominous sign for the economy as it tries to recover from the coronavirus pandemic.

Total sales, which include purchases in stores and online as well as money spent at bars and restaurants, rose 17.7 % in May from the previous month, the Commerce Department said Tuesday. That followed a 14.7 % drop in April, the largest monthly decline in nearly three decades of record-keeping, and an 8.3 % decline in March.

Economists had expected a bounce back from April, when widespread business closures drove retail sales to their lowest level since 2013.

The rise in May is the largest monthly surge on record — drawing a celebratory Twitter post from President Trump — but the retail industry is nowhere near back to normal. Overall sales were still down 8 % from February. Some categories, like clothing, were down as much as 63 % from a year ago.

After more than a month of quarantine, May brought a tentative restart of brick-and-mortar retail across most of the country, with major chains like Macy’s and Gap reopening hundreds of stores. Some restaurants that had either closed or shifted their business to delivery and curbside pickup also reopened for in-person dining.

Driving some of the sales gains was warm weather, a sense of relief after weeks cooped up at home and optimism from some that the worst of the pandemic could be over. But they were also lifted by stimulus money — totaling USD 1200 per recipient, plus USD 500 per child — that will run out in the coming months, with no indications that Congress intends to pass another round of assistance.

“I think a lot of it is lockdown fatigue,” said Beth Ann Bovino, chief U.S. economist at S&P Global. “I would caution not to be fooled by this large gain. We still have a long way to go in repairing the economy.”