Like so much of what happened in the economy in April, retail sales were just awful. Investors will learn just how resilient the American consumer is when May retail sales data are released Tuesday.
Beyond the single month snapshot, the read on retail buying will give the investment markets an indication of how Americans and the retail industry are adapting to the reopening of the economy.
Facial coverings and social distancing remain the rules for safe shopping. Limited occupancy, limited hours and limited supplies are the reality for some retailers and restaurants.
In April, Americans spent 22% less than they did a year earlier with retail stores thanks to the stay-at-home orders and mandatory business closings to fight the spread of COVID-19. The only brick-and-mortar stores where shoppers spent more last month compared to a year ago were grocery stores. Online retailers also saw a bump as buyers accelerated the shift to Internet shopping.
Now, as phased reopenings have begun, the May sales report will shed light on how COVID-19 may continue reshaping retail.
As a sector, retail stocks have fared worse than the overall market since mid-February. Discount stores and retailers with an already robust online presence have fared better than others. At least five chains have been pushed into bankruptcy by the virus including Neiman Marcus, J.C. Penney and J. Crew. As many as 25,000 store locations may close permanently this year according to a forecast from retail data firm Coresight Research as reported by the Washington Post — most of those in shopping malls.
The May data also will be seen as a gauge of how fast consumer spending may rebound. Seventy percent of the economy relies on the American shopper. A strong showing — defined as one that is less bad than April — even during a partial reopening will help underwrite investor confidence.
Financial journalist Tom Hudson hosts “The Sunshine Economy” on WLRN-FM in Miami, where he is the vice president of news. Follow him on Twitter @HudsonsView.