Restaurants Return to Pre-Pandemic Sales Numbers in May

Two friends in bar looking at drink menu together before ordering

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A 1.3% dip in retail sales in May belies a milestone for the pandemic: Spending at restaurants and bars is back, finally exceeding levels seen in the months prior to COVID-19.

Meanwhile, a shortage of cars took a toll on sales at auto dealerships, causing the bulk of May's overall decline, according to data released Tuesday by the U.S. Census Bureau. The decrease was in line with what economists expected, according to a median estimate cited by Moody’s Analytics, and represented only a slight slowdown in a spring of frenzied spending.

Sales at restaurants and bars increased 1.8% to $67.3 billion in May—rising for the third consecutive month to exceed the pre-pandemic peak (in January 2020) for the first time. The recovery reflects that people have more options for spending their money now that many pandemic-related restrictions have been lifted. Eager to get out, consumers have started to shift dollars away from pandemic staples and toward outings and the things that are needed to take them—like clothes and fuel.

“Mask mandates were lifted mid-month and what emerges is exactly what we should hope to be seeing: splurging on big-ticket items and fixing up the house is out (for now); going out to eat and reconnecting with family and friends is in,” economists Tim Quinlan and Shannon Seery wrote in a commentary for Wells Fargo.

Consumers spent a total of $620.2 billion in May, 1.3% less than in April, but still 18% more than in February 2020, before the pandemic locked down the economy. Sales earlier this spring skyrocketed thanks to a third round of government stimulus payments hitting most bank accounts in March. 

A 3.9% drop in auto dealer sales accounted for more than three-fifths of May’s overall decline—thanks to consumers depleting existing inventories earlier in the spring. There were mixed results elsewhere in the economy. Sales fell at furniture stores (2.1%), building material and home improvement retailers (5.9%), and electronics stores (3.4%), but rose for clothing (3%), health and personal care (1.8%), grocery stores (1.2%), and gasoline stations (0.7%).

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