Pandemic restrictions weigh on U.S. consumers

By James Langton | December 16, 2020 | Last updated on December 16, 2020
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Weak U.S. retail sales are dimming the outlook for fourth-quarter growth and erasing any hope of an upside surprise, says BMO Capital Markets in a new report.

The latest retail sales data from the U.S. were “very disappointing,” BMO said, noting that sales dropped by 1.1% in November, which was more than expected. Further, October’s results were revised lower — from a gain to a decline.

There was weakness throughout the data, BMO said.

Sales at restaurants and bars dropped for the second straight month, while segments that held up in the first wave — such as sporting goods and home furnishings — also declined.

While pandemic-related restrictions are to blame for much of the weakness, BMO said supply chain challenges in sectors such as the toy business are preventing sales, even if demand is there.

The only bright spots were grocery sales, up 1.9%, and online sales, which edged 0.2% higher.

Ultimately, the weak results weigh on fourth-quarter growth prospects.

“Although we do not expect a contraction in GDP (unlike in parts of Europe), this removes any upside risk to our growth forecast,” BMO said.

“With savings still elevated, the consumer remains in a good position to start spending again when the restrictions are lifted. So they can spend, but will they?”

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.