The Redbook weekly retail sales index was up 9.1% year-over-year in the week ended March 21 after rising 8.5% in the prior week. In normal circumstances, this would mean anticipation of a banner month for consumer spending in the retail and food sales report for Mach when it is released at 8:30 ET on Wednesday, April 15.
Consumers are definitely out at stores, but probably making fewer trips and loading up when there. The nature of the shopping trips is also more concentrated on emergency supplies and pantry staples, and perhaps items to help keep households amused while stuck in place. A lot of spring merchandise like clothing will sit on shelves for a while. Optional purchases like household furniture and appliances will be put on hold. Motor vehicle sales should be feel the pinch as well.
Gasoline prices have fallen. Normally this might spark a little extra spending with the discretionary income, but not in the present crisis. Additionally, lack of movement outside the home will mean less gasoline purchased. The dollar value of sales at service stations will be doubly affected. Warmer weather means less demand for heating oil during the late winter, so there will be both lower prices and sales of that in the nonstore retailers component.
Tax refund checks may go into savings or immediate household expenses rather than be spent elsewhere. Consumers are worried about how long the restrictions on movement and business will last and what it means for their job security.
Total retail sales may not decline as dramatically as might otherwise be expected thanks to the run on grocery and drug stores in March. It could help keep consumer spending in the first quarter a positive for GDP. However, in April consumers are going to be working down what is in the house rather than going out to buy supplies. Loss of income during a period of forced idleness is going to ensure that spring merchandise will sit around for a while yet. Even if restrictions on movement are lifted in fairly short order and the spread of COVID-19 is more controlled, there are losses in consumer spending that will never be made up.
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