About a month ago, I wrote about consumer spending and how credit card data suggested a pronounced recovery from lows hit in late March. We are continuing to see such in data from both government statistics and corporate earnings reports.

Last Friday, the government released retail sales data for July 2020. Those data showed an increase in sales for the 3rd straight month.  Take a look at the graph below. It shows Total US Retail Sales going back to the beginning of 2006 (the shading indicates US recessions).

What is particularly interesting is the comparison between the 2008/09 financial crisis and the current pandemic. Retail sales declined from the middle of 2008 until early 2009 and then took roughly two years to recover to previous levels. This year, retail sales cratered in March and April, but by July had fully recovered to pre-pandemic levels. Such a difference suggests that the shutdown-induced recession is not the same as other recessions we’ve experienced over the years.

These data are being confirmed in corporate earnings releases from Walmart and Home Depot.  Walmart reported a 9.3% surge in its second-quarter same-store sales and a 97% increase in its e-commerce sales. These increases produced profits far above most analysts’ expectations. Similarly, Home Depot reported 2nd quarter sales jumped 23.4%, which translated into an increase in its bottom line profits.

Much of the news about these companies will focus on the fact that their stock prices have responded by hitting all-time highs. That’s great news for shareholders!  But don’t miss that fact that the success of these companies is being shared by employees as well. During the 2nd quarter, Walmart hired 400,000 hourly working to fulfill online orders, clean stores, and stock shelves. And since the pandemic began, Walmart has paid its associates bonuses totaling $1.1 billion. Home Depot reported that during the 2nd quarter, it invested roughly $480 million in additional benefits for associates, including weekly bonuses for hourly associates in stores and distribution centers.

As I’ve said in previous emails, we’re not out of the woods yet. But data like we’ve received over the past few days suggest that we’re continuing to head in the right direction.

If you have questions or would like to chat, please let me know.

Cheers!