US retail sales plunged a record 16 per cent in April
BALTIMORE , United States (AP) — US retail sales tumbled by a record 16.4 per cent from March to April as business shutdowns caused by the coronavirus kept shoppers away, threatened the viability of stores across the country and further weighed down a sinking economy.
The Commerce Department’s report yesterday on retail purchases showed a sector that has collapsed so quickly that sales over the past 12 months are down a crippling 21.6 per cent. The severity of the decline is unrivalled for retail figures that date back to 1992. The monthly decline in April nearly doubled the previous record drop of 8.3 per cent — set just one month earlier.
“It’s like a hurricane came and levelled the entire economy, and now we’re trying to get it back up and running,” said Joshua Shapiro, chief US economist for the consultancy Maria Fiorini Ramirez.
Shapiro suggested that 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”.
The sharpest declines from March to April were at clothing, electronics and furniture stores. A long-standing migration of consumers toward online purchases is accelerating, with that segment posting a 8.4 per cent monthly gain. Measured year over year, online sales surged 21.6 per cent.
Other than online, not a single retail category was spared in April. Auto dealers suffered a monthly drop of 13 per cent. Furniture stores absorbed a 59 per cent plunge. Electronics and appliance stores were down over 60 per cent. Retailers that sell building materials posted a drop of roughly three per cent. After panic buying in March, grocery sales fell 13 per cent.
Clothing store sales tumbled 79 per cent, department stores 29 per cent. Restaurants, some of which are already starting to close permanently, endured a nearly 30 per cent decline despite shifting aggressively to takeout and delivery orders.
For a retail sector that had already been reeling, a back-to-back free-fall in spending poses a grave risk. Department stores like Neiman Marcus and J Crew have filed for bankruptcy protection. Hotels, restaurants and auto dealerships are in danger. Nearly $1 of every $5 spent at retailers last month went to non-store retailers.
Retailers are being imperiled not only by business shutdowns mandated by states and localities but also by a record loss of 36 million jobs over the past two months. The unemployed typically pull back sharply on retail purchases.
An April analysis by a group of academic economists found that a one-month closure could wipe out 31 per cent of non-grocer retailers. A four-month closure could force 65 per cent to close.
The plunge in retail spending is a key reason why the US economy is contracting. Purchases at retailers are a major component of overall consumer spending, which fuels about 70 per cent of economic activity.
With few Americans shopping, travelling, eating out or otherwise spending normally, economists are projecting that the gross domestic product — the broadest gauge of economic activity — is shrinking in the April-June quarter at a roughly 40 per cent annual rate. That would be the deepest quarterly drop on record.
Spending tracked by Opportunity Insights suggests that consumer spending might have bottomed out around mid-April before beginning to tick up slightly, at least in the clothing and general merchandise categories. But spending on transportation, restaurants, hotels and arts and entertainment remains severely depressed.
Credit card purchases tracked by JPMorgan Chase found that spending on such necessities as groceries, fuel, phone service and auto repair declined 20 per cent on a year-over-year basis. By contrast, spending on “non-essentials”, such as meals out, airfare and personal services like salons or yoga classes, plummeted by a much worse 50 per cent.
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