- Retail sales plunged 16.4% in April on widespread declines
- Industrial production fell 11.2% – marking the largest decline on record back to 1921
- April data exceptionally soft, but probably at least close to near-term bottom for the economy
Economic reports for the month of April are beginning to lay bare the extent of the slowdown from COVID-19 containment measures. US retail sales plunged a whopping 16% in April – more than consensus expectations and reflecting widespread damage by sector. Clothing sales plunged another 80% in April after a 50% drop in March. Furniture sales are down about 2/3 in the 2 months since February. Online sales provided surprisingly little offset – although non-store retail sales were still up 14% from February as of April. And food store sales were up about 10% over that two-month period but declined 13% in April.
The retail sales data for the most part only covers sales of goods. But services spending was likely at least as weak in April – the one services component in the retail numbers, food services, was down 50% over March and April combined. Goods production was also exceptionally soft. Industrial production plunged 11.2% in April (the largest drop since 1921…), led by a whopping 72% drop in motor vehicle and parts production.
The scale of the two-month slowdown over March and April, both in the US and a wide swath of other countries/regions, is already an unprecedented shock. But as ugly as the backward-looking economic data is, it also looks increasingly likely that April is at least close to the near-term bottom for the economy given the number of regions announcing partial easing in virus containment measures. That doesn’t mean the recovery will be quick, some social/physical distancing measures will remain and the sharp shock of recent weeks/months will not be without longer-lasting effects. But it does mean economic growth has probably shifted back to positive territory. The Q2 GDP decline will still be unprecedented, but despite a gradual recovery, at least in GDP terms, beginning potentially as early as May.
