Retail and food services sales dropped 16.4% in April from the prior month, the steepest monthly decline since the U.S. Census Bureau began tracking the data in 1992.
“Some of the declines in individual categories were staggering. Restaurants and bars lost half their business over two months. At furniture and home furnishings stores, sales were off by two-thirds. At clothing stores, the two-month decline was 89%. Increased sales from online retailers didn’t come close to offsetting the downturn elsewhere,” Ben Casselman and Sapna Maheshwari report for The New York Times.
“The drop was far worse than economists had expected, and it was significantly steeper than the revised 8.3% sales decline in March. This April’s retail sales are down 21.6% compared to April 2019,” CNN’s Anneken Tappe and Nathaniel Meyersohn write.
“U.S. stocks traded lower following the dire news. The seasonally adjusted total dollar amount spent on goods dropped back to a level not seen since 2013. As people continue to stay at home across much of the country, they're spending more on food than before but little on other things. And with mass layoffs leaving millions of Americans out of work, discretionary spending has been crunched,” they add.
“Losses were widespread over the month. Virtually every major category of retail purchases tracked by the Census Bureau suffered double-digit losses between March and April -- the exceptions being building materials and gardening equipment, which saw only a 3.5% decline, and nonstore retailers, which include e-commerce purchases and grew by 8.4%,” Andrew Soergel writes for U.S. News & World Report.
“‘The lockdowns are accelerating the shift to online sales that was already in place for the past several years,’ a team of researchers at Wells Fargo Securities wrote in a research note on Friday, noting that nonstore sales last month accounted for nearly 20% of all spending. Over the year, nonstore retail purchases are up nearly 22%,” Soergel adds.
“It’s like a hurricane came and leveled the entire economy, and now we’re trying to get it back up and running,” Joshua Shapiro, chief U.S. economist for the consultancy Maria Fiorini Ramirez, tells the AP’s Josh Boak and Anne D’Innocenzio.
“Shapiro said he thinks retail sales should rebound somewhat as states and localities reopen their economies. But he said overall sales would remain depressed ‘because there is going to be a big chunk of the lost jobs that don’t come back,’” Boak and D’Innocenzio add.
The silver lining, apparently, is that the situation last month was about as bad as it can get.
“April was the cruelest month,” Craig Johnson, president of Customer Growth Partners, tells The Wall Street Journal’s Harriet Torry.
“Retail spending likely bottomed out in the first week of May, he said, with spending picking up due to Mother’s Day and gradual state reopenings,” Torry writes. “‘It’s going to be less worse with each month,’ said Mr. Johnson, ‘as people slowly come out of the foxhole and enter the mainstream of American consumerism.’”
Jim Cramer, the host of “Mad Money” on CNBC, “said the government’s distinction between essential and nonessential businesses has unfairly weighed on some consumer-facing companies,” CNBC’s Lizzy Gurdus reports.
“What can I say? There is just a really horrible distinction between essential and nonessential. … We were talking with Planet Fitness last night. When they made liquor essential and gyms nonessential, it wiped out a lot of gyms. And so what’s going to happen is there’ll only [be] one strong gym,” according to Kramer.
“Consumer spending is the fuel that powers the world’s largest economy, to the tune of 70% of growth. For years, economists have warned the dynamic wasn’t sustainable. Now, those predictions may be coming home to roost as COVID-19 crisis decimates employment and spending, while elongating the anticipated timetable for a recovery,” writes Javier E. David for Yahoo News.
“We already know from the dreadful employment figures that services spending was hammered hard again in April,” Michael Pearce, senior U.S. economist at Capital Economics, wrote Friday in a research note cited by David.
“Given the bigger hit to consumption than we had anticipated, we now forecast consumption to fall by close to 50% annualized in the second quarter. For now we still anticipate a 40% annualized decline in GDP growth, but the balance of risks to that already below-consensus call now lie to the downside,” Pearce continued.
That’s certainly not going to help JC Penney, which filed for bankruptcy on Friday.
“Still, the move doesn’t get any closer to answering the core question: Can anything make 21st century omni-shoppers long for a plain-vanilla department store?” Marketing Daily’s Sarah Mahoney asks