The rollout of the COVID-19 vaccine and government stimulus checks boosted consumer spending across the Chicago metro area in the first six months of 2021, a new analysis of local retail shows, but economists have been warning of a year-end cool down with prices for goods and services on the rise.
Across the six-county area consumers spent a collective $72 billion in the first half of the year, up 32.5% from the same stretch in 2020 when COVID-19 gripped the nation, according to the latest report from Melaniphy and Associates, a Chicago-based real estate consulting and research firm. Those are better numbers than prepandemic 2019, which saw retail sales hit $61.8 billion in the first two quarters of the year.
Chicago did slightly better than the region as a whole during the first half of this year with a 33.7% increase in receipts to $15.2 billion. And Will County came out on top with retail sales climbing 34.7% with Cook County right behind with a 34% increase. Lake, McHenry, DuPage and Kane counties all saw roughly 30% increases in retail sales during the first six months when compared to the same period last year.
The hard-hit restaurant and bar sectors saw sales increase 21.6% between January and the end of June to $7.9 billion across the region, as vaccines became more widespread and restaurants lifted capacity limits.
But there was a corresponding drop in grocery store sales, a sign that consumers were looking for a break from their kitchen after months of being cooped up. In that category, sales fell 3.4% in the first six months of this year, down more than $300 million.
The data also revealed an “unprecedented growth” in apparel sales in the first half of the year, jumping 121.5% to nearly $2.5 billion, says John Melaniphy III, whose firm analyzed state sales tax revenue for the report. He traces the increase in clothing sales to, at least in part, workers who wanted to return to the office in new duds.
The vacationing public was hunting for new looks, Melaniphy said. With various travel restrictions lifted, people updated their wardrobes before hitting the road.
“Consumers don’t go on vacation in tattered clothing, typically,” he said.
Likewise, a broad retail category that includes drugstores and mall-based retail outlets saw a 72% jump in sales to $16.6 billion in the first six months of the year over the same period in 2020 when many nonessential stores were shuttered to stop the spread of the virus.
Sales of furniture and household items in the region spiked 42.2% to nearly $3 billion in the first part of the year, which Melaniphy attributed to some consumers adding home offices and others redecorating their homes after spending so much time there during the pandemic.
Plenty of consumers did more than buy new couches, office chairs and TVs for their homes: Sales of hardware and other building materials saw a surge of 13.1% to $3.8 billion as consumers overhauled their living space. Prices for building materials also spiked, thanks to clogged supply chains, an issue that continues to this day.
While the analysis points to a firm recovery, other economic indicators — from rising prices to labor shortages and supply chain problems — suggest a cooling is happening now or inevitable. Indeed, Melaniphy tells the Tribune he doesn’t expect to see the same spike in spending in the second half of the year, even with the approaching winter holidays.
“So certainly, there was all this pent-up demand. So boom — it was all satisfied” in the first six months of the year, Melaniphy said, “and I’m expecting things to go down as the consumer has already spent all their stimulus checks and all the PPP loans have ended. It’s going to be sobering. The consumer’s discretionary buying power is going to be less than it had been when all the stimulus was out there.”
Overall, he’s expecting a year-over-year increase of 6% in retail sales, which is a respectable number, he says. The metro area hasn’t seen that kind of increase since 2006, the eve of the Great Recession.
Twitter @byldonovan
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