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Economic commentary

Economic commentary

May Economic Review: The worst month ever for the U.S. economy?

After a significant dip in economic activity over the second half of March, April saw perhaps the most rapid downturn on record. Mandatory stay-at-home orders, the (hopefully) temporary closure of “non-essential” businesses, disrupted or broken supply chains, and lack of consumer demand have driven record highs for unemployment. There is a case to be made that the combination of pent-up demand and aggressive monetary and fiscal stimulus will eventually lead to a solid and sustainable expansion, but this will likely require the virus to run its course in one form or another. Until then, the recovery process is likely to prove choppy, resembling more of a W or a U rather than a V. See Nationwide Economics’ take on what's happening and why this month in the economy. 

Economic commentary

Retail spending falls through the floor

Retail sales plunged by a record 16.4 percent for April, with most spending categories down sharply as stock-up buying subsided. When combined with the significant drop from March, total retail spending has declined by nearly a quarter over the past two months. A record drop in gasoline prices for the month led to a 28.8 percent decline in spending at gasoline stations. Widespread stay-at-home orders vastly curtailed in-store expenditures as spending at clothing, furniture, and general merchandise stores saw record declines. Food and drinking places posted a further significant cut in sales while purchases at grocery stores, which surged by 28.6 percent in March as consumers bought for precautionary reasons, fell by 13.2 percent for April. 

Economic commentary

Sobering job losses for U.S. workers

Job losses were record-breaking for April as nonfarm payroll employment plummeted by 20.5 million. While all major job categories saw declines, the service sector was hit the hardest — led by a plunge of 46.7 percent in both recreation and food service jobs. The payroll survey goes back to 1939, and the previous largest monthly decline was in 1945 as World War II was ending — but that drop of almost two million pales in comparison with April’s figure. 

Economic commentary

The economic downturn sharply slows spring homebuying

Homebuyer traffic fell sharply in the second half of March as job losses mounted and governments mandated stay-at-home policies and social distancing measures. New home sales declined by 15.4 percent for the month, led by sharp drops in the Northeast and West regions where stay-in-place orders were enacted earlier. With the shutdown impacting nearly all states for April, sales activity will likely fall further this month. 

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