(AmericanProsperity.com) – State government-induced shutdowns of non-essential businesses and record unemployment forced US retail sales to drop to its worst decline on record. On Wednesday, the Commerce Department said retail sales took an astonishing dive of 8.7% in March. That’s the most significant decline since the government started tracking retail sales in 1992.
In February, the US was experiencing one of the best economies in decades. The March numbers only reflect a partial month of economic decline. Non-essential businesses in many states were ordered to close in the middle of the month.
Economists surveyed by Reuters expected retail sales to fall by 8%. The numbers reinforce the belief by economists that the economy is in a deep recession with no light at the end of the tunnel. While there were significant declines in retail spending, there were also a few bright spots. However, the good wasn’t enough to outweigh the bad.
Declines in Retail Spending
Retail businesses still overwhelmingly rely on people entering stores to make purchases. Two of the biggest segments of the retail industry saw significant drops in sales. Car purchases and vehicle parts dropped by nearly 26%. Additionally, as Americans hunker down at home, they’re unable, or perhaps even unwilling, to take advantage of significantly-lower gas prices. Gas stations reported a 17% drop in sales.
Retail sectors that saw drops included:
- Clothing and Accessories: -50.5%
- Furniture and Home Furnishing: -26.8%
- Food Services and Drinking Places: -26.5%
- Motor Vehicles and Parts: -25.6%
- Sporting Goods/Hobby/Musical: -23.3%
- Gasoline Stations: -17.2%
- Electronics and Appliances: -15.1%
- Misc. Retail: -14.3%
A Surge in Essential Shopping
In what can be described as essential shopping, grocery stores increased their sales as people panicked for items like toilet paper, food, cleaning supplies, and medications.
Retail sectors that saw an increase included:
- Food and Beverage: 25.6%
- General Merchandise: 6.4%
- Health and Personal Care: 4.3%
- Nonstore Retailers: 3.1%
- Building Materials and Garden Equipment: 1.3%
In a bright spot for people looking for work, both Walmart and Amazon reported strong internet sales. Both companies said they plan to hire tens of thousands of workers due to high demand. While internet sales are growing as people stay home, it’s unknown if the trend will continue post-COVID-19 when state governments lift lockdown orders.
However, some economists predict that brick-and-mortar stores that did not make the transition to online sales in recent years may struggle to survive long-term.
Consumer spending makes up approximately 70% of the US economy. While the economy was growing between 2% – 3% before the COVID-19 pandemic, economists say consumer spending could drop as much as 41% before rebounding.
Let’s hope that businesses can safely reopen soon and America can start rebuilding its economy.
~Here’s to Your Prosperity!
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