On top of the backdrop of recent jobless claims topping 30 million, consumer metrics are effectively in a bloodbath. Consider these recent stats:
The Commerce Department released a report that consumer spending plunged 7.5% in March, reflecting the impact the coronavirus has had on the US economy. This is the sharpest monthly drop on records that date back to 1959 and the sharpest quarterly drop since 1980. Consumer spending accounts for 70% of economic activity.
Personal incomes declined by 2% with wages and salaries, the majority of personal income, falling by 3.1%.
Led by the largest quarterly drop since 1980, the overall economy measured by GDP plummeted by an annual rate of 4.8% in Q1.
As if that's not enough, McKinsey & Company recently released a consumer behavior report measured on a global scale. One may only have to look at their own "house" to realize that discretionary spending is being unilaterally pulled back. While optimism is happening in certain pockets, there is a considerable reluctance to spend, especially in certain categories. Forward-looking into the next couple of weeks, not surprisingly in the US alone, Groceries, Snacks Household supplies, and Home Entertainment lead the spending shift to the positive. However, the expected hardest hit includes:
Footwear, Apparel, Jewelry, and Accessories
Furnishings and Appliances
Fitness, Wellness and Personal Care Services
Gasoline, Short-term Wellness Services, Short-term Home Rentals, Travel by Car, Cruises, Adventures & Tours, International Flights, Hotels/Resort Stays, and Domestic Flights
The US Service Sector makes up roughly 71% of the US economy, and an overwhelming majority of the sectors cited above. In spite of the virus continuing to wreak havoc, with a potential resurgence in the coming months, it appears that local and state governments are trying to give businesses a fighting chance with reopening the economy. Hope remains that demand is there. Only time will tell if they are ahead of the curve. Stay safe and healthy.