WASHINGTON – U.S. retail sales plummeted 8.7% in March, an unprecedented decline, as the viral outbreak forced an almost complete lockdown of commerce nationwide.
The deterioration of sales far outpaced the previous record decline of 3.9% that took place during the depths of the Great Recession in November 2008.
Auto sales dropped 25.6%, while clothing store sales collapsed, sliding 50.5%, the Commerce Department said Wednesday. Restaurants and bars reported a nearly 27% fall in revenue.
U.S. consumer confidence has plunged and the vast majority of Americans are hunkered down at home under shelter-in-place orders. Consumer spending drives two-thirds of the U.S. economy, and the record drop in retail sales is a symptom of the sharp recession that most economists believe the U.S. has already entered. Economists at JPMorgan Chase now forecast the U.S. economy will shrink by a record-shattering 40% in the April-June quarter.
“With clear signs of panic buying of necessities and the fact that lock downs were introduced only around the middle of the month means that far worse is to come in April and the second quarter more generally,” said Michael Pearce, an economist at Capital Economics, a consulting firm.
Signifying the titanic shift in consumer behavior, grocery store sales jumped by nearly 26% as Americans stocked up on food and consumer goods to ride out the pandemic. And a category that mostly includes online shopping rose 3.1%.
Spending may be falling at an even faster pace than the retail sales figures suggest. Wednesday's report doesn't include spending on services such as hotel stays, airline tickets, or movie theaters, all of them suffering some of the most severe financial duress during the outbreak.
The toll of the devastation is being unearthed as the U.S. releases more data from different sectors of the economy. On Wednesday, the U.S. reported that industrial production, which includes manufacturing, mines and utilities, posted the biggest drop in March since 1946.