By Julia Horowitz, CNN Business
“Delta? What Delta?”
That was the take from Ian Shepherdson, chief economist at Pantheon Macroeconomics, after seeing the data on US retail sales for August.
Contrary to expectations, US retail sales increased last month as consumers continued to shell out on clothing, furniture and groceries.
It’s a promising sign heading into the crucial holiday shopping season, and indicates that the US economy is demonstrating resilience despite a spike in coronavirus cases triggered by the Delta variant.
“We see only very modest evidence that the spread of the Delta variant is having an impact on demand,” Citi’s Veronica Clark and Andrew Hollenhorst said in a note to clients.
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Another signal: There were 332,000 initial jobless claims in the United States last week. That’s only a slight uptick from the week prior, when claims hit a pandemic low.
The four-week moving average has now dropped to 335,800 claims, its best level in the Covid-19 era, according to Jim Reid of Deutsche Bank.
That’s not to say the Delta variant isn’t having any impact. Seatings at restaurants in the United States appear to have dropped sharply in recent days, according to data from OpenTable.
In August, spending at restaurants was flat month-over-month. Grocery store spending also climbed 1.8%, suggesting that Americans were opting to dine more at home again.
And we can’t forget the jarring US jobs report for August, when just 235,000 positions were added. Restaurants and bars registered a loss of 42,000 jobs.
The data is promising, but also messy. Rising prices due to inflation could be contributing to higher retail sales, muddying the picture. Plus, there’s a huge element of uncertainty about the economic trajectory as colder weather sets in. The Federal Reserve, which meets next week, doesn’t have an easy job charting the path forward.
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For the time being, many are choosing to look on the bright side. New variants may weigh on the economic recovery, but could be far less damaging than early in the pandemic, as vaccinations help consumers feel more confident and allow governments to avoid reimposing strict rules.
“You’ll see more resilience with each wave,” Jeffrey Sacks, head of investment strategy for Europe, the Middle East and Africa at Citi Private Bank, predicted earlier this week.
