Americans have increased their retail purchases by 1.2 per cent in July, with gains in appliances and clothing boosting sales to pre pandemic levels. Sales at retail stores and restaurants have now risen for three straight months, after plunges in March and April, when the pandemic shuttered businesses and paralyzed the economy.

Still, much of the spending was fueled by government aid that had put more money in people's pockets but has since expired. With Americans' income now likely shrinking, economists expect a drop in spending and a potential weakening of growth. Economists forecast growth rebounding in the July-September quarter at roughly 20 per cent annual rate, though that pace would still leave the economy far below pre-pandemic levels.

The government's figures mask a huge shakeout in the retail industry, with Americans pulling sharply back on in-person shopping and spending more online. More than 40 retailers have filed for bankruptcy protection this year, about half of them since the pandemic. That's about double the number for all of 2019.

Many retailers had been ailing before the pandemic. But analysts envision another wave of retail bankruptcies in coming months that would include some companies that were financially healthy before the virus struck. In recent weeks, Ann Taylor's parent company declared bankruptcy. So did the Lord & Taylor department store chain and the discount store chain Stein Mart, which had been in business for 112 years.