Retail sales fell 1.3% in May. Should we worry that consumers are running out of steam as the boost from stimulus checks received earlier this spring fades? An unexpected slowing of consumer spending could have negative implications for the economic recovery, as well as for the embattled retail commercial property sector and retail REITs.

A brief look at recent history dispels these fears. Retail sales in May were still elevated; in fact, even after the decline in last month, spending was 10.9% above the pre-pandemic trend, not far from the 12.8% by which retail sales exceeded trend in April.

How are brick & mortar sales holding up in recent months, following the surge in e-commerce sales during the pandemic? In-store sales had been facing stiff competition from the growing online channel for several years prior to the COVID-19 pandemic, weakening conditions in the retail property markets and impacting retail REITs (note: I am senior economist at Nareit, the worldwide voice for REITs and listed investments in real estate).

The e-commerce share of retail sales (excluding food service, motor vehicles, and gasoline) jumped in April 2020 to 24.8%, from 18.3% just prior to the pandemic. Since then, however, the e-commerce share has drifted lower, and in May was 1.3 percentage points above its trend growth.

The high level of total retail sales and the moderation of the e-commerce share has resulted in brick & mortar sales in May that were 11.1% above recent trends. As vaccination rates rise and the risk of exposures to COVID-19 decrease, more and more shoppers are returning to the stores and malls. Brick & mortar sales are likely to return to the pre-pandemic trend as the boost from stimulus checks runs its course, but robust job growth and rising household incomes are expected to sustain the spending trend.

That’s good news for the economy, for retail commercial real estate, and for retail REITs.