Biggest Drop In US Retail Spending Ever

Biggest Drop In US Retail Spending Ever

almost 4 years ago2 mins

In dramatic scenes not seen since a teenager set off a stink bomb in the food court, new data showed the coronavirus lockdown prompted the biggest drop US retail spending ever 🙈

What does this mean?

According to Friday’s report, revenue at stores and restaurants fell by a greater-than-expected 16% in April – almost double the drop in March, the previous record-holder. But shoppers weren’t picky about where they cut spending, with furniture dropping 59%, electronics 61%, and clothing a massive 79%.

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With so many stay-at-home orders in place, it’s little wonder retailers were hit hard. Plenty of them – like fashion brand J. Crew – have gone under, and department store JCPenney followed suit just last week. The Federal Reserve (the Fed) has now stepped in, starting with an unprecedented program of corporate bond purchases 🏦 And given that many retailers rely on selling bonds – rather than tapping bank loans – to fund their operations, the Fed’s hoping the move will bring down the cost of borrowing and keep them chugging along.

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Why should I care?

March’s grocery sales had benefited from the stockpiling that preceded the lockdown, but internet shopping was the only retail category to grow last month. And even then, sales were pretty tepid 😕 That suggests that even without restrictions on visiting malls and restaurants, many Americans would’ve pulled back on their spending – what with the whole risk of unemployment and all.

Other data out on Friday suggested April may have been the bottom for American numbers: initial May reports showed pick-ups in consumer sentiment and manufacturing activity, albeit from very low bases. Better-than-expected results from Chinese ecommerce giant JD.com, meanwhile, gave some hope that consumer confidence can return to post-lockdown nations 🛍 If disappointing sales at luxury conglomerate Richemont are any guide, mind you, it may be a while before consumers are confident enough to splurge $10,000 on a watch…

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