The Commerce Department report on Wednesday came after millions of Americans were laid off and reinforced economists’ belief that the economy is in deep recession. State and local governments have issued “stay at home” or “shelter in place” orders affecting more than 90% of Americans to stop the spread of COVID-19, the respiratory illness caused by the virus, and to stop abruptly. the country.
Retail sales fell 8.7% last month, the largest drop since the government started following the series in 1992. February data have been revised slightly upward to show that retail sales fell 0.4% instead of falling 0.5% as previously noted.
Economists polled by Reuters had forecast retail sales to fall 8.0% in March. Compared with March of last year, retail sales were down 6.2%.
The Census Bureau said that “many businesses operate with limited capacity or have ceased operations altogether”, he said, “the estimates in this release are in accordance with publishing standards”.
The drop in retail sales last month mirrored the drop in auto dealer revenues, as light vehicle sales fell in March. With millions at home and crude oil prices collapsing amid a deep global recession, gasoline prices fell, which weighed on gas station sales in March.
In addition, the closure of non-essential retailers has caused sales in clothing, sporting goods and furniture stores to drop.
There was also a sharp drop in revenue from restaurants and bars, which ended in-person service and moved to take-out and delivery service. Although some businesses, including restaurants, went online, volumes were insufficient to close the gap in social distancing.
Graphic – Clothing sales were destroyed by COVID-19: here
The slowdown in sales due to social restrictions has more than offset the sharp increase in revenues from online retailers like AmazonAMZN.O), grocery stores and pharmacies because consumers have stocked up on basic necessities such as food, toilet paper, cleaning supplies and medicines.
Graphic – Grocery sales receive a record boost thanks to COVID-19: here
The US stock index futures extended losses on the report. The dollar traded higher for a basket of currencies. The prices of the US Treasury have gone up.
A DIFFICULT MONTH
Excluding automobiles, gasoline, building materials and food services, retail sales rose 1.7% in March after a 0.2% drop revised down in February. These so-called basic retail sales would have been unchanged in February. Basic retail sales most closely match the consumer spending component of gross domestic product.
Despite an increase in basic retail sales in March, economists expect consumer spending to decline at an annualized rate of at least 5.0% in the first quarter, which would be the weakest performance since the second quarter from 1980.
Consumer spending accounts for more than two-thirds of US economic activity. It grew at a rate of 1.8% in the fourth quarter, the overall economy growing at a rate of 2.1% during this period. Economists see no respite for consumer spending in the second quarter, with estimates as deep as a 41% drop rate, despite a historic $ 2.3 trillion budget package, which provided for cash payments to certain families and increased unemployment benefit checks.
About 16.8 million people have filed for unemployment benefits since the week ending March 21.
Auto sales fell 25.6% in March after falling 0.5% in February. Service station revenues fell 17.2%. Sales at electronics and appliance stores fell 15.1%. Sales at building supplies stores increased 1.3%. Revenues for clothing stores fell 50.5% last month, while those for furniture stores fell 26.8%.
Spending on sporting goods, hobbies, musical instruments and bookstores fell 23.3%. Sales in restaurants and bars fell 26.5% last month.
But online and mail-order retail sales jumped 3.1%. This followed a 0.7% increase in February. Grocery sales increased 26.9% and revenues from health care facilities jumped 4.3%.
Goldman Sachs estimates that the economy contracted at an annualized rate of 9.0% in the first quarter, which would be the largest drop in gross domestic product since the first three months of 1958.
Economists believe the economy went into recession in March. The National Bureau of Economic Research, the private research institute considered to be the arbiter of American recessions, does not define a recession as two consecutive quarters of decline in real gross domestic product, as is the basic rule in many country. Instead, it is looking for a drop in activity, spread across the economy and spanning more than a few months.
Report by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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