US retail sales drop at record pace amid coronavirus shutdown
US retail sales plunged at the quickest pace on record for the second month in a row in April, official figures have shown, as coronavirus containment measures caused shops to close and Americans to stay in their homes.
The Commerce Department said sales dropped 16.4 per cent last month compared an 8.3 per cent drop in March, which was itself a record fall. It was the biggest collapse in sales since at least 1992 when comparable records began.
“The magnitude of the consumer pullback in April was truly staggering – it speaks to the ferocity of the Covid-19 shock,” said Lydia Boussour, senior US economist at consultancy Oxford Economics.
The plunge in retail sales will deeply trouble policymakers. More than 36m Americans have filed new jobless claims since the pandemic began, suggesting that spending power is being seriously eroded.
And global policymakers will be worried too, given that the American consumer is a key driver of the international economy.
Sales at clothing and accessories stores fell a monumental 89 per cent as they were shut across the country. Sales at food and drink outlets plunged 49 per cent.
Consumers also spent much less on food and essentials, having stocked up in March.
A rise in online shopping of 22 per cent was not enough to make up for the drop at physical stores.
Retail sales are expected to rise in May after April and March’s historic falls as states lift coronavirus restrictions.
However, the big question is how fast the economy will recover. Economists fear that residual nervousness about the virus and the staggering surge in unemployment could drag out the recovery.
Michael Pearce, senior US economist at Capital Economics, said: “Even with lockdowns now easing and spending beginning to rebound, we now think consumption will decline at a 50 per cent annualised pace in the second quarter, worse than the 40 per cent pace we had previously forecast.”