Unprecedented Decline in Retail Sales and It Will Get Worse


A slew of economic reports came out today, all of them terrible. But the next set will be worse.

Inquiring minds are investigating the Advancer Retail Sales Report for March 2020.

Ten Highlights

  1. Total: -8.7%
  2. Motor Vehicles and Parts: -25.6%
  3. Furniture: -26.8%
  4. Food and Beverage Stores: +25.6%
  5. Gasoline: -17.2
  6. Clothing Stores: -50.5%
  7. Sporting Goods Stores: -23.3%
  8. General Merchandise Stores: +6.4%
  9. Department Stores: -19.7%
  10. Food and Drinking Places: -26.5%
  11. Nonstore Retailers: +3.1%

It was a disaster across the board except for food and beverage stores plus nonstore retailers like Amazon.

Why general merchandise?

The General Merchandise category includes Walmart, Target, and other stores that sold food. They remained open. Department stores like JCPenney are a subset of General Merchandise.

Empire State Manufacturing Report

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The Empire State Index plunged to -78.2, a record low.

The lowest level this indicator had reached prior to April was -34.3 during the Great Recession. Seven percent reported that conditions improved over the month, while 85 percent reported that conditions had worsened. The new orders index fell fifty-seven points to -66.3, and the shipments index dropped sixty-six points to -68.1, indicating a sharp decline in both orders and shipments. Delivery times were longer and inventories were modestly lower.

Economists expected a reading of +7.0. Wow.

I am not sure when the survey period was, but this report is for April, so at least part of the Covid-19 shutdown had started.

Housing Market Index

The HMI index gauging current sales conditions dropped 43 points to 36, the component measuring sales expectations in the next six months fell 39 points to 36 and the gauge charting traffic of prospective buyers also decreased 43 points to 13.

“This unprecedented drop in builder confidence is due exclusively to the coronavirus outbreak across the nation, as unemployment has skyrocketed and gaps in the supply chain have hampered construction activities,” said NAHB Chairman Dean Mon. “Meanwhile, there continues to be some confusion over builder eligibility for the Paycheck Protection Program, as some builders have successfully submitted loan applications while others have not been able to. NAHB is working with the White House, Treasury and Congress to get the broadest builder participation possible. Home building remains an essential business throughout most of the nation, and as the pandemic shows signs of easing in the weeks ahead, buyers should return to the marketplace.”

Homebuilding an essential business?

Nothing is Working Now: What's Next for America?

On March 23, I wrote Nothing is Working Now: What's Next for America?

I noted 20 "What's Next?" things.

We will not return to the old way of doing business.

Globalization is not over, but the rush to globalize everything is. This will impact earnings for years to come.

Checks are on the way, but there will be no quick return to buying cars, eating out, or traveling as much.

Many retailers and small businesses will fail. JCPenney fired a big salvo today as noted in Start of Retail Apocalypse: JCPenney Misses Interest Payment

Expect More Misery in April and May

As bad as this data looks, things will get much worse, especially retail sales. The report above was for March.

There is no reason to expect a quick spring back when people do return to work, which now looks more like mid-May or early June than the end of April.

The Covid-19 Recession Will Be Deeper Than the Great Financial Crisis.

A v-shaped recovery is not at all in the cards.

Mike "Mish" Shedlock

Comments (41)
No. 1-12

What do you expect when you slam the breaks on the economy and then continue to extend an indiscriminate shutdown.

Assume prediction of 20 percent unemployment. Payroll taxes drop by 1/5 th - Social security will be underfunded soon.

Wouldn't you think?


The economy will only get worse from here; half of March had somewhat normal spending. We are not just witnessing (as in the last recession) but actively participating in the dismantling of our economy. Next step is to increase human surveillance, as we can’t have people free to do what they want. Finally, we will ensure that pesky obstacles like individual rights are made subservient to the authority of our politicians (aka leaders), because they need to be listened to.

In the end, where will we be? In a once-beautiful country beset by depression, tens of millions unemployed, millions more homeless, massive bankruptcy, and probably people dying of starvation. But at least they won’t catch the virus and have a 3% chance of dying, right?


This motivated me to look up who makes Charmin, which Target can't keep in stock ... Proctor and Gamble (PG) is only about 4% below all-time highs after raising their dividends today.

Ian Alexander
Ian Alexander

Excluding grocery stores, retail sales fell over 13%. April will not have the same boost from grocery as March, though comping the monthly change, the percent change probably won't be so dramatic. The problem is, reopening is not going to be everyone all at once, creating a sudden boom. It will be slow and gradual and full of people still scared of a second wave; scared of losing their job; not having a job anymore. Even an L seems unlikely to happen this year. We fell off a cliff and we landed on a hill.


Hmmm, this is very interesting. People started 2020 with a lot debt after spending like drunken sailors during the 2019 Holidays. Then came along the COVID 19, and again they began their shopping expeditions to buy the essentials (no gold) toilet paper (the new valued commodity) Paper towels (which you can find now) Alcohol (yeah! giveme some of that), porn (not for the pius) , more streaming services, food. Now, after the shopping waves, I believe that lots of people already max out their credit cards, I would imagine that their checks would be used (the smart ones) to hit the ATM and hold on to their cash while they take advantage of free (postpone) rent/mortgage, postpone credit card payments and other debt. So yeah, no retail shopping for luxury or non-essentials for quite some time.


On the national news tonight, saw Fauci and Bill Gates saying at least one whole year before any substantial reopening as we wait for the [magical] vaccine.

It was also said that no large gatherings of people are going to be allowed until after that. So that precludes professional sports and music events coming back this year. What will be the economic losses related to elimination of music and major sports?

Bottom line is that many jobs are not coming back and the longer the economy remains closed and crippled, the more people are going to need permanent economic support for a long time.

This might be marked as the event that ushers in UBI forever, not robots as we previously thought.


Must be time for stocks to rally then right?

Think about it, at least those numbers are not zero across the board!!


I like Nicholas Nassim Taleb's take better. Had we instituted the following beginning Jan 26:

  1. Stop ALL International flights.
  2. Compulsory mask wearing.
  3. Contact tracing.

We would have been fine. The Chinese are super shitty, but our initial response was shitty as well. "Tell me when the first Caucasian has died" should stand with "It's just a bad flu" as the two stupidest things someone can say in this country.


Exactly who were the idiots that are selling this news today? You didn't see this coming? Who the hell didn't see this coming? Unreal.


First off there has never been a successful corona virus vaccine. Next for every official case there are probably 25 more unofficial so this is not that deadly. Also the only people that die are the ones that need a ventilator and 80-90 % of them die anyway.

So be happy we destroyed the economy for essentially no reason.


As I said before, this is why we can't have nice things: https://www.sfgate.com/food/article/San-Francisco-Cassava-temporarily-closes-masks-15202930.php

In the US, freedom simply means: if the choice is between me feeling uncomfortable/inconvenienced by wearing a mask and possibly hurting other people, guess which one wins out?


It isn't about uncomfortable, unless you mean empty stomach. The economy can't remain substantially shut down for a year. We will be in full blown Venezuela mode by then. The supply chain is already screwed up. They first talked about how a meat shortage was bunk this morning on the news and then went on about the benefits of a vegetarian diet. Hmm. It will only get worse. Central planners in DC, or even state capitols deciding which businesses are essential and which are not and managing the supply chain to keep everybody fed and housed will not work. It has never worked. We cannot survive 50% or more unemployment. Government will not survive the wrath of the private sector unemployed when government workers continue at full pay. There are two choices:

  1. Put everyone to work and send the kids to school NOW, but do everything possible to protect the vulnerable ( this will include testing of workers in nursing homes, etc. ) and let C19 work through the younger population where the death rate is near 0.1%

  2. Continue to keep the economy shut down waiting for a vaccine that may never come, create a credit collapse, riots, poverty, hunger and homelessness. Then when everything is in disarray, C19 will burn through because there is nothing and no one left working to stop it.

I hope I'm wrong.

Global Economics