If you thought March’s record-setting drop in retail sales was “impressive”, you hadn’t seen anything yet.
The numbers for April are out, and they are dastardly. Retail sales collapsed 16.4% MoM, nearly double the previous month’s historic collapse and well worse than estimates. The market was looking for a 12% decline. The range was comical (-25% to -6.5%).
It goes without saying the 16.4% drop is a record in data going back nearly three decades.
Ex-autos, the print was -17.2% for April, double the estimated drop. The control group posted a 15.3% decline MoM, worse than even the lowest estimate from economists.
To be sure, this was expected, but if you want to get a sense of the extent to which consumption ground to a near total halt for some retailers, you really need to look at the on year comparisons by type of merchant. The visual below gives you a sense of the wipeout.
Clothing and accessory stores were largely closed, and it’s hard to sell things when the doors are locked, but it’s worth at least considering the possibility that the near 90% collapse from April of 2019 effectively means that the end game for retailers which haven’t totally embraced E-commerce is now upon us. COVID-19 may have been the death blow.
Grocery store sales were sharply higher versus April of last year, although they were lower MoM.
Make no mistake, this is a terrible report, even versus dour expectations. It underscores the extent of the damage inflicted by the lockdowns, and as noted on countless occasions over the past week by everyone from Fed officials to casual market observers, the return of consumer spending will depend largely on whether consumers feel safe.
Clearly, there will be some pent up demand, and if Wisconsin is any indication, the bars may be full for a week or two. Additionally, I’d be remiss not to note that Georgia has had some success reopening. But all it’s going to take is one major flare-up in cases and/or a super-spreader event to make all but the most cavalier consumers put away their wallets, and trade their libertarian hats for a face mask.