Business

Shoppers are still spending despite the Delta variant

US retail sales increased last month as consumers continued to dish out on clothing, furniture and groceries despite rising cases of the Covid-19 Delta variant.

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By
Nathaniel Meyersohn
and
Anneken Tappe, CNN
CNN — US retail sales increased last month as consumers continued to dish out on clothing, furniture and groceries despite rising cases of the Covid-19 Delta variant.

Sales beat economists' expectations, increasing 0.7% in August from the month prior, the Census Bureau said Thursday. Economists surveyed by Refinitiv had forecast a 0.8% drop for the month.

It's a promising sign about consumer appetite heading into the winter and pivotal holiday shopping stretch for retailers.

Shoppers "still have cash on hand. We have more jobs in the economy. Everything still looks pretty good for consumer spending, particularly in the near term," said Gus Fauher, the chief economist at PNC Financial. "Consumers will be spending a lot."

Retailers and logistics companies are preparing for the holiday rush by staffing up and racing to bring in extra inventory to stock shelves.

"We're going to see strong demand through the rest of this year," Walmart CEO Doug McMillon said at an investor conference last week. "I think customers, families want to celebrate Christmas. They want to have a Thanksgiving."

Retail sales this holiday season will increase by up to 9% from last year, while e-commerce sales will grow by up to 15%, Deloitte said in a forecast released this week. The firm believes rising vaccination rates and elevated household savings rates will drive holiday sales.

"E-commerce sales will continue to grow as consumers demonstrate an ongoing and steady movement toward buying online across all categories," said Daniel Bachman, Deloitte's US economic forecaster, in a news release Tuesday.

Still, the Covid-19 Delta variant looms over the holiday stretch. Some chains have said that consumers pulled back on trips to stores beginning in late July when the Delta variant started surging and shifted their purchases online.

Supply chain disruption and hiring difficulties also threaten to dash retailers' holiday hopes. And higher prices than last year could limit some consumers' holiday purchases and ability to splurge on gifts.

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