U.S. consumer activity took a massive blow in March due to the rapidly spreading and deadly coronavirus outbreak. According to the U.S. Commerce Department, retail sales during the month nosedived, reflecting the devastating impact of social distancing and job losses.
Headline retail sales plunged a record 8.7% during March, which was worse than the 8% decline expected by economists. Core retail sales, excluding the volatile auto and gas components, fell 3.1%, better than the 5.2% estimated decline. Retail sales dipped 0.4% and core retail sales sank 0.2% in February.
Within core components, consumer spending online rose 3.1% and jumped 26.9% at grocery stores.
However, sales at department stores sank 19.7%, furniture stores saw a 26.8% drop in spending, sporting goods sales fell 23.3% and spending at clothing retailers plummeted the most at 50.5%.
Meanwhile with quarantine measures implemented in many regions across the country, non-core components also saw some hefty declines in activity. Auto and auto parts sales plunged 25.6% and gas sales fell 17.2%. Sales from food services was down 26.5%, but spending on building materials increased 1.3%.
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With most consumers quarantined in their homes, spending has nearly come to a standstill aside from essential purchases such as toilet paper and groceries. The U.S. consumer makes up about 70% and is a critical part of the economy.
“With clear signs of panic buying of necessities and the fact that lockdowns were introduced only around the middle of the month means that far worse is to come in April and the second quarter more generally,” Capital Economics Senior U.S. Economist Michael Pearce wrote in a note Wednesday.
Credit Suisse economist James Sweeney agreed that the worst is yet to come.
“March should mark only the beginning of a recessionary decline in consumption and the decline is likely to intensify in April. Overall we expect consumption to fall by 17.5% QoQ annualized in Q2, the worst quarter since WWII,” Sweeney wrote in a note April 9.
As of Wednesday morning, there were just under 2 million cases of coronavirus and 127,601 deaths worldwide. The U.S. has the most infections of any other country, with more than 609,000 cases and 26,059 confirmed deaths, according to Johns Hopkins University data.
[See Also: Jobless claims: Economists expect another 5.5 million workers filed for benefits]
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Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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