More Worse-than-expected U.S. Economic Data for March

A slew of data releases for the U.S. economy all came in worse than expected this morning. As a reminder, the New York Fed’s Economic Indicators Calendar and MarketWatch’s Economic Calendar are great tools for tracking upcoming data releases and following data in real time.

Retail Sales: The advanced March retail sales report showed retail and food service sales crashing 8.7% relative to February, the largest month-over-month on record. The report came in slightly worse-than-expected, as MarketWatch reported a median forecast of a 7.1% decline. If 8.7% doesn’t sound like a lot, we’re talking a decline of $46 billion in one month; consumption accounted for 68% of U.S. GDP in 2019. The U.S. Census Bureau’s data release can be found here.

Visualization via Ben Casselman of the New York Times:

Big ticket “durable goods” (expected to last three years or longer) are the most volatile component of retail sales, and often the first to get walloped in recessions. Excluding auto & parts sales, which plunged 25.6%, retail sales fell by a more muted 4.5%. Unsurprisingly grocery sales surged, up 26.9%, as people stocked up for stay-at-home orders. Restaurant and bar sales were down 26.5% and clothing sales halved, declining 50.5% relative to February. Expect the April numbers to be way worse.

Industrial Production: The Federal Reserve’s indices for industrial production and capacity utilization were also released for March, and came in worse-than-expected. Industrial production fell 5.4% for the month, while the share of industrial capacity being used fell from 77.0% in February to 72.7% in March. These are also preliminary releases and will be subsequently revised. The Fed’s data release can be found here.

Caveat: These March data releases largely predate stay-at-home orders and closures of nonessential businesses, as discussed in this post on the March jobs report. California was the first state to issue such an order on March 19, with Illinois and New Jersey following suit on March 21 and New York doing so on March 22. Speaking of New York…

April in the Empire State: The only report on economic conditions for April was far more bleak, but also reflected regional heterogeneity and the staggered spread of the coronavirus across the country. The New York Fed’s Empire State Manufacturing Survey—like it sounds, a gauge of manufacturing activity in New York State—plunged 57 points to -78.2 in April, the lowest level on record; the low recorded during the Great Recession was -34.3. Negative values for this index indicate that economic activity and business conditions are worsening. The NY Fed’s data release can be found here.

Upcoming: Tomorrow brings data on initial unemployment insurance (UI) claims for the week ending April 11; MarketWatch is reporting a median forecast of another 5 million UI claims, above and beyond the staggering 16.8 million claims from the previous three weeks. We’ll also get March data on housing starts and building permits, as well as the April reading of the Philly Fed’s regional Manufacturing Business Outlook Survey.

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