Making More Bad History on the Economy: April Retail Sales Plunge

By at 15 May, 2020, 11:58 am

by Raymond J. Keating-

We keep making economic history, but none of it is good. The latest history-making release comes from the U.S. Census Bureau on retail sales for April 2020.

Monthly retail and food services sales in April plunged by a record 16.4 percent, after a drop of 8.3 percent in March. With a staggering level of jobs lost and businesses shut down, it’s no surprise that consumers are hunkering down and not spending.

The two following charts show the striking decline in sales in both dollars amounts and percentage terms.

Source: Federal Reserve Bank of St. Louis, FRED

Source: Federal Reserve Bank of St. Louis, FRED

In terms of dollars, the monthly April 2020 sales stood at the same level as was the case in April 2012, that is, retail sales are at the same point as they were 10 years ago.

Meanwhile, the percentage decline of 16.4 percent in April was the largest monthly drop on record (in a dataset going back to 1992), with the second largest percentage drop being March’s 8.3 percent. After that, the biggest monthly declines came in November 2008, a decline of 3.9 percent, and in October 2008, a drop of 3.8 percent.

The April 2020 numbers point to a big decline coming in the GDP data for the second quarter in terms of real personal consumption spending, which, while not the driver of growth (as normally consumers follow what’s happening in terms of business investment, creation and hiring), makes up the bulk of GDP (roughly 65 percent to 70 percent). Indeed, the decline in the economy in the second quarter of this year promises, again, to be historic – in a very bad way.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.



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