Retail Sales Plunge a Historic 8.7% After Pandemic Takes Hold

April 15, 2020 by Dan McCue

WASHINGTON — Despite the widespread hoarding of toilet paper, hand sanitizer and other items that continue to leave many store shelves bare, U.S. retail sales plunged 8.7% in March, an unprecedented decline, the Commerce Department reported Wednesday.

The deceleration of sales far outpaces the previous record decline of 3.9% that took place during the depths of the Great Recession in November 2008, the department said.

Overall, clothing store sales took the biggest hit, declining 50.5%, while restaurants and bars saw a decline in sales of 27% and auto sales dropped 25.6%.

Meanwhile, grocery store sales jumped by nearly 26% as Americans stocked up on food and consumer goods to ride out the pandemic.

Consumer spending drives two-thirds of the U.S. economy, and the record drop in retail sales is a symptom of the sharp recession that most economists believe the U.S. has already entered.

The pandemic is seen as being particularly tough on brick and mortar retailers, who were already taking it on the chin from online retailers.

With a nationwide shutdown of malls and most stores, the coronavirus outbreak and government orders to stay at home and practice social distancing is putting many clothing retailers in peril.

More than 250,000 stores, including Macy’s, Nordstrom and Nike, which sell non-essential merchandise have been shuttered since mid-March and have furloughed hundreds of thousands of workers.

Some retailers, notably The Gap and Ralph Lauren, have also announced they have temporarily stopped ordering products for the fall.

According to Sourcing Journal, a trade publication, the Gap sent an email to vendors that said in part,”stores are the lifeblood of our business and while we are still operating our e-commerce channels, they simply cannot make up for having our stores closed.”

“As much as we want to minimize the impacts to our supply chain, the situation is fluid and we need to remain responsive,” the email reportedly said.

Wednesday’s report wasn’t all bad news for brick and mortar stores, however, big box retailers that sell essentials like food and household goods actually saw their sales rise.

But no one appears to be doing as well presently as Amazon and Walmart, who have both ramped up hiring to meet demand for home delivery of products.

Last week, Fitch Ratings said it expects discretionary spending by shoppers to decline by as much as 40%-50% in the first half of 2020.

In addition the ratings company downgraded a number of department store and specialty retailers last week with ratings on four retailers, Macy’s, Tapestry, Capri, and Dillard’s, being lowered to non-investment grade.

“We project retail discretionary spending will decline 40%-50% in the first half of 2020, with a slow rate of improvement expected through the summer from a current 80%-90% decline in sales if stores start to open mid-May or early June,” Fitch ratings said.

“Given an increased likelihood of a consumer downturn, we are forecasting sales to be down mid-to-high single digits in the second half of 2020 and sales in 2021 to decline 8%-10% from 2019 levels,” it said. “Sales declines for the secularly challenged department stores are expected to be more material on a relative basis. Revenue trends could improve exiting 2021, given the typical four to six quarter duration of a consumer downturn, resulting in 2022 being a growth year.”

Economy

Rep. Neal Eyes Massive Coronavirus Relief, Climate and Infrastructure Package
Congress
Rep. Neal Eyes Massive Coronavirus Relief, Climate and Infrastructure Package

WASHINGTON — House Ways and Means Chairman Richard E. Neal's attitude toward legislating under a Democratic-led White House might aptly be described as "never let a crisis go to waste." The Massachusetts Democrat wants to take a page from his party's 2009 playbook, when the Obama administration took office amid the wreckage of... Read More

Mnuchin to Put $455 Billion in Funds Out of Yellen's Easy Reach
Economy
Mnuchin to Put $455 Billion in Funds Out of Yellen's Easy Reach

WASHINGTON — Treasury Secretary Steven Mnuchin will put $455 billion in unspent Cares Act funding into an account that his presumed successor, former Federal Reserve Chair Janet Yellen, will need authorization from Congress to use. Mnuchin plans to place the money into the agency's General Fund, a Treasury Department spokesperson said Tuesday. That fund... Read More

Stabenow Says Smaller Coronavirus Relief Bill Better Than Nothing
Economy
Stabenow Says Smaller Coronavirus Relief Bill Better Than Nothing

WASHINGTON — A top Senate Democrat said Tuesday that she's engaged in bipartisan discussions on COVID-19 aid and urged quick action even if that means "a short-term package for the next few months." "We need to act," said Sen. Debbie Stabenow, D- Mich., the fourth-ranking Democrat in that chamber... Read More

Thanksgiving Food Prices Sink as Americans Scale Down Their Feasts
Economy
Thanksgiving Food Prices Sink as Americans Scale Down Their Feasts

Turkey prices are sinking as the pandemic may keep some American families from hosting big groups this Thanksgiving. The price of ingredients in a traditional turkey dinner for 10 people is down to the lowest level in a decade, driven largely by grocers discounting the meal's centerpiece to... Read More

Wind Energy Labor Pact Viewed as Sign of What Biden Economy Will Look Like
Economy
Wind Energy Labor Pact Viewed as Sign of What Biden Economy Will Look Like
November 20, 2020
by Dan McCue

Ørsted, the Danish renewable energy group, and the North America's Building Trades Unions have entered into a pact to train an offshore wind construction workforce as the firm eyes construction of a series of wind farm projects up and down the East Coast. The deal comes... Read More

Airlines Say Thanksgiving Demand is Faltering as CDC Warns Americans Not to Travel
Travel
Airlines Say Thanksgiving Demand is Faltering as CDC Warns Americans Not to Travel

DALLAS — Three of the biggest U.S. airlines say demand is weakening for the usually busy Thanksgiving period as the CDC cautioned Americans against traveling for the holiday. United Airlines, Southwest Airlines and American Airlines said Thursday that they have seen an increase in cancellations and a decrease in new bookings as a surge in COVID-19 cases... Read More

News From The Well
scroll top