US April retail sales could deepen the losses – Guest Analysis

Ramy Abouzaid

ATFX (AE)’s Ramy Abouzaid believes that the upcoming figures might be ignored – to a certain degree – by the financial markets – given the optimistic outlook backed by re-openings of major economies.

By Ramy Abouzaid, ATFX (AE) Head of Market Research

With mandatory shutdowns all over the states, the data for retail sales going out on Friday will surely reflect the effect of COVID-19 on the US economy. Even with the re-opening process in some states, the measurements taken to contain the spread – such as social distancing – will further limit a fast rebound in sales while a high unemployment rate would sharply depress retail sales components.

A quick look on March figures, many analysts believed that the numbers were bad, but it could’ve been worse. While being the worst monthly figure on record with a fall of 8.7%, it’s rational to believe that restaurants and bars, for example, should’ve witnessed a fall greater than the 26,5% recorded, while gasoline station sales fell by 17.2%, again it’s rational to see worse figures. Clothing sales were the worst with a fall of 50.5%, while furniture sales went down by 26.8%. 

What might have helped March’s report – if we can actually say that – was two main factors; panic buying and shutdowns taking place in the second half of the month. We see that food sales went up to 25.6%, while health spending rose to 4.3%, Nevertheless both factors It did not change the negative nature of April’s figures.

Over the month of April, lockdowns were across the country and millions of workers lost their jobs – Total nonfarm payroll employment fell by 20.5 million in April, and the unemployment rate rose to 14.7% – we believe that the figures will be drastically worse, while retail shoppers limiting their spending. 

April’s Retail Sales report will likely show weaker figures. We are expecting to see a drop by 13.5%, after a decline of 8,7% in March. Gasoline component expected to witness a decline of 22% in April, while it fell to -10.5% for the month of March, and -3.4% in February, while construction spending would face a drop of 12%. It is also important to mention that vehicle sales fell to an 8.6 million from 11.4 million in March and 16.8 million in February.

We still believe that the upcoming figures might be ignored – to a certain degree – by the financial markets – given the optimistic outlook backed by re-openings of major economies, such as Europe and the US. It seems that the most likely scenario, accepted by the markets, that businesses will re-open and the millions laid-off workers would return to their jobs.

Sentiments in the markets did alternate the truth many times, but with the current scenario, we cannot bet on that. A new wave of the virus outbreak could happen again when shops re-open, this would bring us back to ground zero and could lead to a longer recovery period even with the government and Federal Reserve support.

The V-shape recovery in retail sales seems like a “too good to be true” scenario, and going back to normality seems like a challenge even after COVID-19, even with respecting the measurements taken to contain the Covid-19 spread and social distancing we believe a full recovery could take many months to happen.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

  • Read this next

    Digital Assets

    Celsius founder Mashinsky agrees to shared lawyers with Sam Bankman-Fried

    Former Celsius CEO Alex Mashinsky has addressed potential conflicts of interest in his legal representation during a brief hearing in a New York courtroom.

    Digital Assets

    Sam Bankman-Fried captured in first jail photo

    Sam Bankman-Fried, the once-billionaire founder of FTX, has been spotted looking quite different with a new beard and a slimmer figure in a photo that’s been making rounds, reportedly taken inside New York’s Metropolitan Detention Centre.

    Market News

    Bitcoin stalls at $53,000 level, Ethereum reaches $3,000

    Bitcoin (BTC) faced renewed resistance at the crucial $53,000 level on Tuesday, indicating that the primary cryptocurrency is likely to continue consolidating before making its next decisive move.

    Digital Assets

    UK targets new laws for stablecoins and crypto staking within six months

    The United Kingdom is gearing up to enact fresh legislation regulating stablecoins and crypto staking within the next six months.


    Masa’s Milestones Before Mainnet Launch

    Since its launch in August 2022, Masa, the premier decentralized network for personal data, has experienced rapid growth, securing over 1.2 million unique wallets and accumulating more than 23 million data points. Despite a bear market, the network has attracted over 40,000 node operators to its testnet within just 18 months.

    Digital Assets

    Web3 Greatest Startup Competition Hits $10M in Prizes

    We’re thrilled to announce the return of the highly anticipated Startup Competition at Paris Blockchain Week. With a staggering array of prizes totaling over $10 million, encompassing funding, grants, credits, accelerations, listing, and more, this competition has become a cornerstone event within the blockchain startup ecosystem.  

    Digital Assets

    Hedge fund Tyr Capital faces dispute over exposure to FTX

    Crypto hedge fund Tyr Capital found itself embroiled in a dispute with one of its clients concerning its investment exposure to the bankrupt digital assets exchange FTX, as reported by the Financial Times on Tuesday.

    Retail FX

    Plus500 revenue down to $725 million, unveils $100M share buyback

    Israeli-based, but London-stock market listed Plus500 Ltd (LON:PLUS) today reported its 2023 results, which came “significantly ahead” of analysts’ estimates.


    Strategies for Profiting from Interest Rate Fluctuations

    The world of Forex trading is a complex and dynamic domain where interest rates play a pivotal role in shaping currency values. Octa’s team of financial experts delves into this intricate relationship, providing traders with a comprehensive understanding and strategies to harness economic indicators for enhanced trading performance.