LGT Navigator: US retail sales rise to pre-pandemic levels

The US retailers are making more sales again. They took in 7.5% more in June compared to the month before, according to the Department of Commerce in Washington. However, the increases were not as high as in May (18.2%). According to Reuters, Economists had expected growth of only 5.0% for June. Private consumption accounts for more than two-thirds of US economic output, so this is supportive for businesses and overall economic growth. 10 out of 13 major retail categories grew, reflecting stable gains in furniture, electronics, appliances, clothing, sporting goods, and restaurants and bars. The value of retail sales has therefore recovered to pre-pandemic levels with two solid consecutive gains in April and June.

Although business activity has picked up in the United States during the last weeks, economic activity is still a long way from the level before the corona crisis, according to the Federal Reserve. Between January and March, gross domestic product fell at an annualized rate of 5%. Markets expect an even bigger dive for the second quarter, due to the containment measures against the pandemic. Fears of further measures, a second lockdown or other forms of political backpedaling persist. The state of California already re-closed all inside dining and other indoor entertainment facilities this week.

Unemployment in the US still well over 10 percent

According to the Labor Department, a total of 1.3 million US Americans applied for unemployment benefits in the last week. This means that the number remains at the very high level of last week. This may be interpreted as a sign of labor market recovery, but the numbers are actually flattening out at a level six times higher than before the crisis. The number was even 50'000 headcounts higher than expected by economists, according to Bloomberg. The ongoing pandemic measures and the aftermath of the lockdown have turned full employment into massively rising unemployment in the USA. The still increasing virus cases give no reason to calm down.

New infection record in the USA

The United States broke its daily record for coronavirus infections on Thursday, reporting more than 77 000 new cases. The number of deaths has risen by almost 1 000 within 24 hours. More than 138 000 Americans have now died of Covid-19. Experts warn that the number of cases will continue to rise after the recent record numbers and the alarming increase in hospital admissions in many states. In the hardest hit areas in Texas and Arizona, the places for corpse storage are running out. The number of deaths per day has steadily decreased since the peak in April.

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: David Wolf, +41 44 250 83 48, E-Mail: lgt.navigator@lgt.com
Source: LGT Bank (Switzerland) Ltd.

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