Coronavirus Closures Lead U.S. Retail Sales To See Biggest Drop in Nearly 30 Years
U.S. retail sales have a large drop in the month of March. The sales have suffered an 8.7% dip. It is reportedly the biggest drop since tracking the rates began in 1992.
Mandatory store closures due to the coronavirus outbreak has made million of Americans unemployed. Many shops still remain closed and consumers at home as "stay at home" orders are still in effect in many states. A report by CNBC says that over 90% of Americans have been affected by stay at home orders issued by state and local governments.
Experts predict an even worst decline in the economy as a result of the coronavirus outbreak.
"The economy is almost in free fall," Sung Won Sohn said, a business economics professor at Loyola Marymount University.. "We will see the bottom when the coronavirus infection rates stabilize. It's going to be a pretty deep bottom from which to come up."
While physical retail stores declined, there have been a huge increase in purchases from online retailers like Amazon, grocery stores, and pharmacies.
Consumer spending makes up for over two-thirds of the economic landscape in the U.S. The lack of spending will have huge consequences as the economy re-opens later. Experts predict a consumer spending rate as low as 41% in the second quarter of the year. Although there is some consumer activity online, it will not be enough for balance the lack of spending in other areas.
"In general consumer spending is going to look about as bad as it has ever been, although there will be some categories of resilience," Tim Quinlan said, a senior economist at Wells Fargo Securities in Charlotte.
He added: "The panic buying at grocery stores cannot offset the retrenchment in spending that we will see in other categories."