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March’s 8.7% Drop in US Retail Sales Marks Biggest Decline in Decades

All the panic-buying and pandemic prepping in the world couldn’t keep March’s retail sales numbers afloat.

U.S. retail sales plunged 8.7 percent in March, compared with a revised decline of just 0.4 percent in February, the U.S. Department of Commerce said Wednesday, marking the worst drop since the government began tracking retail sales in 1992.

Seasonally adjusted, sales at food and beverage stores were up 25.6 percent in March to $82.10 billion from February, while “clothing and clothing accessories stores were down 50.5 percent” to $11.09 billion from last year. Department store sales for the same period fell 19.7 percent to $8.78 billion, while online and other non-store sales rose 3.1 percent to $68.79 billion.

The Commerce Department cautioned that while the U.S. Census Bureau didn’t believe the reliability of its data had changed, there’s a chance that retailers’ ability to provide accurate, timely information could be limited if businesses closed down amid government mandates were unable to reply to the monthly survey of sales results.

Nearly four weeks ago, most sellers of discretionary goods began to temporarily close their doors as state and local governments began issuing shelter-in-place orders to curtail the spread of the coronavirus. Non-essential retailers such as apparel stores shut down, while some grocery retailers, along with some restaurants for take-out and deliveries–remained opened.

“COVID-19 has hit the retail industry unevenly,” National Retail Federation’s chief economist Jack Kleinhenz said Wednesday. “This is a market of haves and have-nots. The haves are the stores that remain open with lines out the doors to buy daily necessities while the have-nots are the stores that have closed and are taking the brunt of the impact of the pandemic. These numbers should come as no surprise given the mandated shutdown of our economy to slow the spread of the virus.”

The coronavirus pandemic drove a U.S. retail sales drop of 8.7% in March, the biggest decline in decades, the Commerce Department said.
Retailers and food courts began shutting their businesses mid-March to help curb the spread of COVID-19. Shutterstock

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Kleinhenz warned that data going forward could indicate a worsening situation. “Even if the economy begins to reopen in May, consumer behavior may take a long time to adjust. The road to recovery could be long and slow,” he said.

Putting the latest sales data in perspective regarding the severity of the impact from COVID-19, the NRF, one of the retail industry’s largest trade organizations, said the “monthly drop is the largest ever recorded, exceeding a 4.3 percent decline in November during the Great Recession.”

Wells Fargo Securities’ Tim Quinlan says the retail numbers set up “consumer spending to be a major drag on GDP growth in the second quarter.”

Though the data hardly comes as a surprise, “the magnitude of the decline was even larger than expected,” the senior economist said, adding that if the virus gets under control by the summer, “we should see a swift rebound in the second half of the year.”