U.S. retail and food services sales declined by a modest 1.3 percent in May after climbing steeply for most of 2021. The drop reported by the U.S. Census Bureau earlier this week is widely considered not a setback in the country’s economic recovery but rather a symptom of it. As COVID restrictions are widely lifted and businesses are opening up again, consumers are simply shifting their spending habits, away from big-ticket items that many Americans bought with their stimulus money, towards services that were unavailable for much of the past year.
Much of that service spending is not reflected in the retail sales report, but one important service sector is. As the following chart shows, food services and drinking places, i.e. restaurants, bars, cafeterias etc., saw sales rebound over the past few months, with overall spending exceeding pre-pandemic levels for the first time in May.
Interestingly, other retailers that bucked the overall trend in May include the ones that were hardest hit by COVID restrictions. Clothing stores as well as health and personal care retailers continued their rebound in May, as people are socializing again, making it worthwhile to shop for new clothes or cosmetics.