US retail sales post biggest drop in a year; coronavirus drag coming

WASHINGTON: U.S. retail sales fell by the most in more than a year in February and the coronavirus pandemic is expected to depress sales in the months ahead, which could strengthen economists' expectations of a consumer-led recession by the second quarter.

"Disruptions from the coronavirus will bring the economy's main engine to a halt," said Lydia Boussour, a senior U.S. economist at Oxford Economics in New York."As the virus keeps consumers at home and panic spreads, discretionary spending and 'social consumption' will take a significant hit." A survey from the New York Fed on Monday showed a record plunge in factory activity in New York state in March to levels last seen in 2009. The weakness in manufacturing was underscored by a separate report from the Fed on Tuesday showing output at factories barely growing in February.

The Fed on Tuesday revived a funding facility used during the 2008 financial crisis to help American businesses manage their short-term liquidity. Treasury Secretary Steven Mnuchin said US$10 billion from the Treasury's Exchange Stabilization Fund was being invested in the new commercial paper funding facility.

In February, auto sales decreased 0.9per cent after rising 0.8per cent in January. Receipts at service stations tumbled 2.8per cent, reflecting cheaper gasoline. Sales at electronics and appliance stores declined 1.4per cent. Grocery and healthcare stores sales fell marginally. There was panic buying in late February, which saw shelves at supermarkets, pharmacies and other establishments cleaned out of household essentials, including food and toilet paper.

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