Retail and food services saw their biggest monthly drop on record
Retail and food services sales in April plummeted 16.4%, their largest decline since the government began tracking data. Monthly sales in March were $483.5 billion compared to $403.9 billion in April, according to the Commerce Department.
The dismal figures almost doubled March’s massive drop of 8.3% as stay-at-home orders began to take effect, businesses across the country shut down, and millions were laid off from their jobs and lost income.
“I think obviously [the report] is a little bit discouraging but I also think it’s not that surprising to see how much retail — apparel specifically — suffered,” said Alexis DeSalva, a senior research analyst with Mintel.
The clothing and clothing accessories category experienced the biggest drop at almost 79%. Nearly every type of retail operation declined, even grocery stores, which decreased 13.2% last month.
Camilla Yanushevsky, an equity research analyst at CFRA Research, thinks this figure reflects how people had initially panicked about the coronavirus and began stockpiling food and household items in March, but now don’t have as much to buy. “They already overbought everything in March, and the psychology of the consumer switches from stockpiling to penny pinching,” she said.
Alexis DeSalva said the decline may also reflect more grocery purchases at places such as Amazon, Target and Walmart instead. People may be buying all their necessities at a store like Walmart so they can avoid making multiple trips.
The only category to see gains was “nonstore retailers,” like online businesses, which jumped 8.4%.
While the clothing stores category had the biggest decline, the category could get a boost as companies advertise sales and consumers shift into a “treat yourself” mentality.
“I think some of these promos that rival Black Friday or Cyber Monday are going to cause a spur of demand for apparel,” Yanushevsky said.
Yanushevsky added that sporting goods equipment and apparel may also see a boost as the summer season begins and more people want to get out of the house. But businesses that sell bigger ticket items, like cars, will probably take longer to recover.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
Give today and get our limited edition tote.