U.S. consumer spending during April fell 13.6%, the steepest monthly decline since the records began in 1959.
According to the Commerce Department, total expenditures during the month — when a majority of the country was still in lockdown due to the coronavirus — were $10.92 trillion. Contributing to the decline was a $943.3 billion decrease in spending for services and a $758.3 billion decrease in spending on goods (mainly for food and beverages).
However, consumers also significantly scaled back their fashion purchases. Spending on clothing and shoes in April plummeted 49% year-over-year, to $208.6 million.
There were glimmers of hope for the economy, though. Notably, personal income rose 10.5%, primarily due to the government stimulus checks and additional unemployment insurance that was distributed as part of the CARES Act.
The U.S. economy has been in freefall for months, since the COVID-19 virus outbreak forced businesses to shutter and individuals to quarantine in their homes in March and April. More than 40 million Americans have applied for unemployment since the pandemic took hold, and a growing number of retailers and brands have filed for Chapter 11 bankruptcy protection or closed their doors permanently.
Throughout May, though, states have begun to loosen their restrictions to varying degrees, prompting a slight uptick in consumer spending. Payments solutions firm Klarna recently reported a 20% rise in average daily transactions for apparel and footwear during the week of April 25 – May 2.
Nevertheless, economists predict the U.S. economy will be slow to recover, even as stores and businesses fully reopen. “The problem is, there are still a lot of people who aren’t comfortable going to bars or restaurants or shopping,” said Amanda Weinstein, a professor of economics at the University of Akron. “If those consumers aren’t comfortable, then they’re not going to do it, whether the economy is open or not. I don’t think we’re going to see a full recovery until consumers can feel completely confident, whether that’s a vaccine or some type of better cure.”