Inquiring minds are investigating the Advancer Retail Sales Report for March 2020.
Ten Highlights
- Total: -8.7%
- Motor Vehicles and Parts: -25.6%
- Furniture: -26.8%
- Food and Beverage Stores: +25.6%
- Gasoline: -17.2
- Clothing Stores: -50.5%
- Sporting Goods Stores: -23.3%
- General Merchandise Stores: +6.4%
- Department Stores: -19.7%
- Food and Drinking Places: -26.5%
- 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
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
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:
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%
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.
This waiting on a vaccine crap is insane. I’m thinking there’s an agenda, for sure. And if they do get a vaccine, and it actually works, then maybe they should put that kind of effort into some of our other ailments!
It’s a vast conspiracy! Another one!
Not a conspiracy. Just no good outcome, no matter what.
On the other hand, there is no lack of people that will take advantage of a bad situation for political or personal gain
As I said before, this is why we can’t have nice things: link to sfgate.com
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?
Land of the selfish, home of the dumb.
If YOU’RE worried then wear a mask yourself. Or put your head in a paper bag and then wear ski goggles over it. And then buckle on a Michelin Man insulated suit.
But don’t try to force me or embarrass me to live in the shadow of your personal fear and hysteria, because I am not going to do it!
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.
There was a SARS vaccine that passed the early trials, and was safe and effective in preliminary tests. They did not complete the final stage of trials because SARS was over, so officially it never got final approval or went into production. Had SARS continued to be a problem, it would have gone into final stage trials, and appeared likely to pass.
You don’t know that for certain. Are you in a high-risk demographic? You seem to be given your level of concern. If so, why don’t you continue to stay at home while the rest of us go on with our lives? The data does not support the policies in place. Period.
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.
I like Nicholas Nassim Taleb’s take better. Had we instituted the following beginning Jan 26:
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.
Caucasian is a stupid word, owing to some pseudo science in Germany in the 19th century about the Caucasus mountains being the region where the white skull/physiognomy was present in its purest form. Most white people don’t think of themselves as having Chechnyan ancestry.
How about shutting in all the vulnerable people. You don’t put the entire population in a safe house, you lock the criminals in a jail house. By sealing assisted care homes (I mean, pay the staff K$30 bonus for camping inside) and quarantining the vulnerable (BMI + underlying conditions × age), you can sequester >98% of the pool of people placing extra demand on ICU’s and ventilators. As soon as the virus has gone through the rest of the population (2 months), you can ease up on the lock down.
Now we’re widening the curve and expanding the window of vulnerability. 100% testing would also allow you to shut in the few (carriers) instead of the many (entire population).
These measures are going to cost 1000× (if not a million, globally) the number of life years you could possibly be saving: Most victims close to 80, little life expectancy, at most 12% survive intubation, but probably far less have 1 year survival. The number of extra victims saved by staggering ventilator use cannot add up to more than a few hundred cases.
Really, you’d have to lock up all the people over 50, and more likley 40, not just over 80. Even then, what is not known is how many people end up with permanent lung, heart, or liver damage. The virus does serious damage to all three, and I’m guessing that the number will be in the 10-20% range of people who survive, but have lifelong complications.
read that the average life expectancy in a nursing home is 6 months. supposedly 25% of the folks dying are from nursing homes. Add to that the infection vector from workers at these facilities who leave and go into their communities. fully agree that strongly recommending those compromised to self-quarantine would have been the approach. The overreach and reaction taken by governments may be acceptable for a short time but people are not going to accept being herded into pens for long. The American mindset is more one of rebellious nature. The longer Guv tries to maintain control the more dissent you can expect to see.
Jesus Webej.
Wrong again, Carl. Look at the provisional CDC data here: link to cdc.gov . Approximately 78% of fatalities are over 65; approximately 91% of fatalities are over 55. Why don’t you actually look at some data before making any more pronouncements? This virus can do serious damage to old people, people with underlying medical conditions, and people who simply chose not to take care of their heath (i.e., the obese). The bottom line is that those under 55 who are in good health are not at high risk with this virus. The data is crystal clear.
Must be time for stocks to rally then right?
Think about it, at least those numbers are not zero across the board!!
The Powell Put. Stocks will rally as long as the FED buys.
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.
Those 2 clowns can suck it!
Gates and Fauci are making a big mistake and assuming people will behave rationally. There is no reason to believe that will happen. It is far more likely that people stop the social distancing, and we have a massive second wave. Historically every pandemic has killed far more people in the second wave than the first. That seems inevitable this time, too.
“This might be marked as the event that ushers in UBI forever, not robots…”
Why not both?
Who cares what those two have to say? I certainly did not vote for either of them, and nobody else did either. They have been wrong about many things regarding this virus. Behaving rationally would mean isolating the old and sick and allowing those under 55 to resume their lives. The strategy being pursued by most states is insane!
No, the strategy is the only sane choice. Some countries have tried to take other paths, such as the one you suggest, but abandoned it when the extent of the disaster became apparent. If enough people continue to social distance to slow it, we can re-open, but with caution, but I don’t think that’s going to happen. Instead I think we are headed for an epic disaster.
I agree. But the major media worships at their feet.
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.
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.
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.
With people at home all day, they do their business at home, so demand for residential TP is way up, while demand for commercial TP has plummeted. Georgia-Pacific, who makes commercial toilet paper has nowhere to sell it. I wouldn’t be surprised at all to start seeing Commercial brands of TP in groceries.
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?
Well, if we all caught it at once, the mortality would be a lot higher than 3%, more like the 10-15% numbers you are seeing in Italy and Spain. That, plus all the people with permanent heart, lung, and/or liver damage would take a pretty hefty toll on the economy, too.
Some states, such as Washington, have about got this under control. We’ll have to how much they are able to open their economy.
You can’t say what the fatality rate in Italy or Spain is as the denominator, the number of infected people, is unknown. What we can say is that .036% of the population to date has succumbed to the virus in Italy.
Hence, this is why all of the old people and those with underlying conditions need to self-isolate. The young and healthy need to be released from home confinement! The CDC and state data is clear; 55 and over comprise 90+% of the fatalities.
It won’t help, as you well know. It is either everyone does social distancing, or no one.
You’re making it sound like our economy was humming along fine until the last few months. That’s not remotely true, plus our cherished individual rights have been under non-stop assault since 9/11.
I get peoples’ concern that the lockdown could do more harm than good, but let’s go easy on the hyperbole. We were on highly precarious footing last year and we still are. Even if the virus does permanent economic damage, the strongest condemnation history books will be able to offer is that it accelerated an already inevitable collapse.
People have been waiting for the “already inevitable collapse” of America you mention since at least 1971. I don’t disagree that the economy is unsustainable, but how many more years before it would have otherwise derailed is pure speculation.
Until now. In the last 4 weeks alone 22 million people filed for unemployment. This is a massive destruction of our economy, not at some hypothetical future date, but now, today. Tens of millions of people just lost the income from their jobs, and with it (depending on the size of their unemployment check and their home situation) their ability to pay their rent/mortgage, health insurance, and buy food for themselves and their families. Mish posted an article about thousands lining up at the food bank in San Antonio, that is happening in other locations around the country as well.
That is not hyperbole, that is reality.
I just saw this, apparently my notification tool is seriously lagging.
Surely you can think of some events between 1971 and 2020 that greatly accelerated the collapse. Repealing Glass-Steagall? TARP?
If you didn’t see a huge shift after the last crisis in 2008 when we adopted ZIRP, I don’t know what to tell you. I’m not just saying that our current structure is unsustainable, that’s putting it too mildly.
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?
Hard to guess on that one. Most of the mortalities are seniors, so longer term the effect may make Social Security more financially sound. That’s a problem for later, though.
That’s what I thought too. Social Security might actually be solvent again if we let this run around. But don’t think you’ll get to collect, because Covid 23, Covid 27, etc will arrive next time and we won’t be able to collect either.