Tied up in the knot of questions around the coronavirus crisis — When will a vaccine be ready? Will stores have to close again? — is the quandary of just how shoppers will act during the pandemic.
Will consumers spend?
For the majority, the answer depends on whether or not they have a job — and the news on the score was good on Thursday even as the Federal Reserve warns about a rocky economic recovery ahead and several states pull back on their reopening plans due to renewed outbreaks of the coronavirus.
The U.S. added 4.8 million nonfarm jobs in June on top of the 2.5 million positions added back in May after much of the workforce was sent home in March to social distance, according to the Labor Department’s monthly update.
Still, that was a long way from reversing what remains massive unemployment. The unemployment rate fell to 11.1 percent in June from 13.3 percent, but that compares to record low unemployment before the pandemic of 3.5 percent — and keeping an accurate tally of the jobs figure has been a challenge for number-crunchers given the unprecedented swings in the economy.
Overall, the numbers were better than projected by economists, who had penciled in the addition of 3.7 million jobs and an unemployment rate of 12.5 percent.
Retailers have been a big part of the rush back to work. June employment in retail rose by 740,000 after May’s 372,000 in May — although that is still less than half of the 2.4 million jobs lost in March and April combined.
Apparel and accessories specialty stores expanded payrolls dramatically, adding back 201,600 workers during June to employ 767,200 while department store employment rose 48,700 to 906,900.
Some retail jobs simply won’t come back with the bankruptcies prompting a host of retailers to trim — including Neiman Marcus Group, J. Crew Group and J.C. Penney Co. Inc. — and everyone else cutting back, too. Macy’s Inc. said last week it would eliminate 3,900 corporate and management roles in an effort to save $630 million annually, while Nordstrom has confirmed it has laid off thousands throughout its operations.
The June retail gains reflect the easing of social distancing restrictions around the country, although with COVID-19 cases spiking in Texas, Florida and elsewhere, it’s not clear if the restart of retail will be rolled back and to what extent. States have begun to roll back or delay their plans to, for example, allow indoor dining at restaurants.
Retailers report that when they do reopen, sales have been better than their dire projections, but still considerably down.
Consumers likewise are feeling better, but still not as confident as they were pre-pandemic.
The Conference Board’s Consumer Confidence Index rose to 98.1 last month from 85.9 in May, but is still down from over 130 at the start of the year.