Retail Sales: There’s Doom, There’s Gloom, but There’s Hope, too. (There has to be, Right?)
The headlines Friday morning were blaring with the pain of plummeting retail sales in April.
“America’s retail sales completely collapsed in April,” CNN.com wailed.
“Retail sales come in far below estimates as virus paralyzes U.S. businesses,” Fox News lamented.
“Retail sales plunge a record 16.4 percent in April, far worse than predicted,” CNBC howled.
Clothing stores, restaurants, electronics and furniture took huge hits. But of course they did. April was the first full month when most businesses were closed because of the coronavirus pandemic.
“This should come as no surprise since April was the first full month when most businesses not considered essential were closed, both in retail and across the economy,” National Retail Federation Chief Economist Jack Kleinhenz said in a statement.
A decline of 12.3 percent had been predicted in April from March, according to economists. All things considered, we were surprised the expected decline was so high.
The U.S. Census Bureau said retail sales during April were down 21.6 percent when compared to April 2019. Retail sales also dropped almost twice as much during April as they did in March, when they were down 8.3 percent.
But there’s really no sense in comparing April to other months, considering an economic lockdown was unprecedented. As for all the doom and gloom, Kleinhenz remains hopeful.
“Now that we’re in mid-May, many businesses are already starting to reopen,” he said. “Relief payments and pent-up demand should provide some degree of post-shutdown rebound, but spending will be far from normal and may be choppy going forward.”
NRF President and CEO Matthew Shay commented in a statement, “It is a resilient industry serving a smart consumer, and despite today’s report, we know it will be leading our nation’s economic recovery as this crisis recedes.”
Kleinhenz said that he’s still of the opinion that “we went into this with the economy on a sound footing and that we will hopefully come out of it the same” when the virus is contained, somewhat contained or just becomes part of our daily lives until a successful vaccine is developed.
“But we’re going to need more data to tell us whether the underpinnings of the economy have been damaged and how badly,” he added. “We need to carefully watch the data and learn to understand what it is telling us.”
Kleinhenz also cautioned that the reliability of April’s numbers could be questionable because many retailers whose businesses were closed were not in their offices to respond to the Census Bureau’s monthly survey of sales data.
NRF’s calculation of retail sales, which excludes automobile dealers, gasoline stations and restaurants in order to focus on core retail, showed April was down 14.1 percent from March and down 8.7 percent year-over-year. The NRF said its numbers show less of a decline than the Census Bureau because the categories excluded were among those most affected as fewer people were driving and most restaurants were limited to take-out orders if not closed entirely.
Every category of retail, except online, was down on a monthly basis in April, including grocery stores and others that had surged in March as consumers stocked up on food. Online, grocery stores and building materials were the only categories that saw a year-over-year gain.
According to the NRF, specifics from key retail sectors during April included:
- Online and other non-store sales were up 21.2 percent year over year and up 8.4 percent month over month.
- Grocery and beverage stores were up 13.3 percent year over year but down 13.1 percent month over month.
- Building materials and garden supply stores were up 1.2 percent year over year but down 3.5 percent month over month.
- Health and personal care stores were down 10.8 percent year over year and down 15.2 percent month over month.
- General merchandise stores were down 13.8 percent year over year and down 20.8 percent month over month.
- Sporting goods stores were down 48.7 percent year over year and down 38 percent month over month.
- Electronics and appliance stores were down 64.8 percent year over year and down 60.6 percent month over month.
- Furniture and home furnishings stores were down 66.3 percent year over year and down 58.7 percent month over month.
- Clothing and clothing accessory stores were down 89.3 percent year over year and down 78.8 percent month over month.