Cant Win The Mall

Image source:

What's going on?

In dramatic scenes not seen since a rogue teenager set off a stink bomb in the food court, new data showed the lockdown has prompted the biggest drop in US retail spending ever.

What does this mean?

According to Fridays report, revenue at stores and restaurants fell by a higher-than-expected 16% in April almost double the drop in March, the previous record-holder. And shoppers werent picky about where they cut spending, with furniture dropping 59%, electronics 61%, and clothing a massive 79%.

With so many stay-at-home orders in place, its little wonder retailers were hit hard: plenty of them like fashion brand J. Crew have gone under, and department store JCPenney followed suit just last week. So the Federal Reserve (the Fed) has now stepped in, starting with an unprecedented program of corporate bond purchases. And given that many retailers rely on selling bonds rather than tapping bank loans to fund their operations, the Feds hoping the move will bring down the cost of borrowing and keep them chugging along.

Why should I care?

For markets: Its not you, its me.
Marchs grocery sales had benefited from the stockpiling that preceded the lockdown, but internet shopping was the only retail category to grow last month. And even then, sales were pretty tepid. That suggests thateven without restrictions on visiting malls and restaurants, many Americans wouldve pulled back on their spending what with the whole risk of unemployment and all.

The bigger picture: April showers bring May flowers?
Other data out on Friday suggested April may have been the bottom for American numbers: initial May reports showed pick-ups in consumer sentiment and manufacturing activity,albeit from very low bases. Better-than-expected results from Chinese ecommerce giant JD.com, meanwhile, gave some hope that consumer confidence can return to post-lockdown nations. If disappointing sales at luxury conglomerate Richemont are any guide, mind you, it may be a while before consumers are confident enough to splurge $10,000 on a watch

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Klein Und Dandy

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.