With thousands of stores closed around the country, U.S. retailers saw sales plunge by 8.7 percent in March. That represents the worst monthly decline on record as millions of consumers stopped visiting restaurants, bars, and shopping malls due to stay-at-home orders for coronavirus containment. While sales of cars, furniture, and electronics all experienced double digit drops, spending at clothing stores plummeted by more than 50 percent. Manufacturing capacity and oil production also fell to their lowest rates since the end of World War II, with experts predicting that things will likely get worse from here.
“We’re in a deep freeze and the chill is bone-chilling,” said economist Diane Swonk. “That’s what you get in response to a lockdown.” This morning, the Labor Department announced that another 5 million people filed for unemployment benefits last week, bringing the number of jobless Americans to more than 22 million over the course of a month. The actual total of unemployed people is likely even higher than that since many states are overwhelmed with requests that they have not yet processed. “The job losses are historic,” said economist Julia Coronado. “It means that we are going to be in for a double-digit unemployment rate.”
Meanwhile, Amazon has seen sales increase by 3 percent as it hired more than 100,000 additional workers to handle the extra volume from online shoppers. Sales at grocery stores leaped by a whopping 26.9 percent last month, although supply chain problems and potential labor shortages have started to trouble the operations of supermarkets. As unemployment increases alongside widespread economic uncertainty, the potential effect on the economy could be catastrophic. “The labor market is obviously very, very important, and has a high correlation with what is going on in the economy,” said Wells Fargo chief economist Jay Bryson. “It is showing us what I think we all know, that the economy is falling off a cliff at an unprecedented rate.”
- Do you think many retailers will be able to recover after this drastic loss in sales?
- Should states and the federal government provide businesses and workers with more economic relief during this unprecedented time? Why or why not?
Sources: Harriet Torry and Sarah Nassauer, “Coronavirus Closures Froze Swaths of U.S. Economy in March,” The Wall Street Journal, April 15, 2020; David Gura, “Another 5 Million People Filed Jobless Claims Last Week, Bringing Total to Almost 22 Million in One Month,” NBC News, April 16, 2020.