Retail sales - growth and change in August. Lots of questions for September

The re-emergence of COVID-19 in August does seem to have had an effect on the month's retail sales for the country, at least in where people chose to spend. Those figures came out recently, and were generally spun as good news after a seasonally-adjusted decline in July.

U.S. retail sales unexpectedly increased in August, likely boosted by back-to-school shopping and child tax credit payments from the government, which could temper expectations for a sharp slowdown in economic growth in the third quarter.

The surprise rebound in retail sales reported by the Commerce Department on Thursday defied slumping consumer confidence. Sales were driven by a surge in online purchases, which offset a continued decline at auto dealerships. But sales in July were much weaker than initially estimated.

Economists have been downgrading their gross domestic product estimates for the current quarter, citing plunging motor vehicle sales, which are the result of an acute inventory shortage, and a flare-up of COVID-19 infections fueled by the Delta variant of the coronavirus.

But note the "much weaker than initially estimated" amount of sales for July, which were revised down from a 1.0% loss to a 1.7% loss. So compared to the data we had before this report, we only saw retail sales rise by 0.15%, which isn't so great in the big picture. It also means that seasonally-adjusted retail sales were lower in August than they were in April, when COVID seemed to be fading as a concern.

Sure, sales are higher compared to the COVID winter, and even the pre-COVID times of February 2020. But there's been a lid on growth ever since, and increased COVID cases and hospitalizations aren't going to help for September.

There seemed to a shift back toward spending patterns that we had before most Americans were able to be vaccinated. Amazon and other online/mail order retailers bounced back after a Summer of lower sales, and big box stores also made a comeback with back-to-school season and more people likely consiolidating their trips to reduce COVID exposure. At the same time, auto sales continued to drop with supply shortages, the COVID-era Bubble in hobby, sporting goods and book stores is deflating, and bars and restaurants slowed its recovery in August.

But even with the lack of growth in retail, we continue to see and hear about labor shortages, particularly in service industries. That may have been because of increased business as things opened up in Spring, but now it seems to be related to more people quitting in the industry vs more demand.

It would be sadly ironic if those shortages start to clear due to cutbacks in spending vs more hiring in the coming months, and with uncertainties on the rise along with coronavirus cases, it means we're going to have to pay more attention and prepare to react as Summer turns into Fall.