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The U.S. will hang on to its title as the biggest retail market in the world despite COVID-19, thanks to a boost from government stimulus and consumer spending from the comfort of home, according to eMarketer.

U.S. retail sales are now poised to grow 0.8% for the year,
reaching $5.506 trillion, up from a previous forecast for a 10.5% decline. That
represents $612.20 billion in sales eMarketer experts hadn’t anticipated in
April.

China’s retail market is now forecast to fall by 2.9%, compared with a previous forecast for a 4.0% decline. China’s retail sales in 2020 are expected to reach $5.130 trillion in 2020, down from $5.283 trillion in 2019.

Read: Lowe’s sales strengthened in major cities during the most recent quarter

“In China, the economic development model is oriented around investment, construction, manufacturing, infrastructure build-outs, real estate development, and giant state-owned (or state-directed) enterprises that undertake projects in service of these goals,” eMarketer’s Ethan Cramer-Flood wrote.

“Therefore, in times of economic stress, China’s best bet is
generally to juice investment activity by major corporate players by
implementing policies that help energize these constituencies.”

On the other hand, the U.S. government pumped money into the
pockets of consumers through its stimulus package.

In-store shopping was limited in 2020, with retailers temporarily shut or customer capacity reduced. Moreover, many consumers felt it was too risky for shopping at brick-and-mortar locations. These factors accelerated the shift to e-commerce.

Also: Walmart says shoppers are making fewer trips but spending more on bigger baskets

“[E]conomic pain accrued overwhelmingly to U.S. restaurants,
bars, entertainment venues, hotels, airlines, travel companies, educational
institutions, theme parks, movie theaters, salons, etc.—and most of the money
that normally would’ve gone to these service providers instead went to goods
retailers,” eMarketer said.

“To put it succinctly: Nobody went anywhere or did anything
in 2020, and instead they used their activities budgets to buy stuff.”

Some of the categories that have benefitted included home goods and consumer electronics, with shoppers spending on upgrades to their living spaces, backyards, and home offices.

Don’t miss: Gap’s Old Navy and Athleta brands are leading the company’s turnaround

Apparel generally took a hit, however, sales of comfortable clothing like pajamas and athleisure gear were in demand.

The SPDR S&P Retail ETF
XRT,
-1.04%

has rallied 36.3% over the last year. The Amplify Online Retail ETF
IBUY,
+0.67%

has skyrocketed 117%. And the benchmark S&P 500 index
SPX,
-0.44%

is up 15.3% for the period.

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