Retail sales slid in July amid jump in COVID-19 cases

Consumers are pulling back on spending, a sign the latest COVID-19 wave is hurting the U.S. economy. Retail sales fell 1.1% in July, the U.S. Commerce Department reported on Tuesday, a much larger drop than the 0.3% decline Wall Street analysts had expected.

The report is the first glimpse into whether a surge in COVID-19 cases in July has kept people from heading out to shop. At the end of July, the U.S. Centers for Disease Control and Prevention began recommending that even vaccinated people start wearing masks indoors in public places due to the Delta variant causing a spike in COVID-19 cases. "Recent data suggest that the spread of the Delta variant has driven a renewed plunge in consumer confidence in early August, suggesting that retail spending will remain under pressure," Andrew Hunter, senior U.S. economist with Capital Economics, told investors in a report. "Moreover, that comes at a time when consumption was already likely to be weighed down by the withdrawal of fiscal support and surging prices eroding purchasing power."