Test: Economic and Financial Analysis Article - 2

The COVID-19 crisis also led to dramatic swings in household spending. Retail sales, which primarily tracks sales of consumer goods, declined 8.7 percent from February to March 2020, the largest month-to-month decrease since the Census Bureau started tracking the data (U.S. Census Bureau 2020a). Although some areas (e.g., grocery stores, pharmacies, and non-store retailers) saw increases in demand as lockdown measures began, others (e.g., clothing stores, furniture and appliances stores, food services and drinking places, sporting and hobby stores, and gasoline stations) saw declines. In early May, as some states lifted social distancing restrictions, sales began to recover in most goods sectors (U.S. Census Bureau 2020a). Overall, U.S. retail sales increased 17.7 percent from April to May, the largest monthly jump on record, recouping 63 percent of March and April’s losses (U.S. Census Bureau 2020a). Growth in retail sales continued through the summer: by August, retail sales were 2.6 percent above their August 2019 level (U.S. Census Bureau 2020a).To help put those swings in such spending into historical context, figure E shows the percent change in real advance retail and food sales from the peak of a business cycle during recessions between 1980 and 2020.

In addition to consumer spending, the COVID-19 crisis has damaged the nation’s industrial production (i.e., output in the manufacturing, mining, and utility sectors). As shown in figure F, U.S. industrial production dropped sharply in March and has since only partially rebounded. This decline poses a host of challenges for the U.S. manufacturing sector, which employs nearly 13 million workers (Federal Reserve Bank of St. Louis [FRED] 2020a), especially those that depend on workers whose jobs cannot be carried out remotely.

The effects of the crisis vary by industry subsector, with the construction machinery subsector having experienced less-severe effects than it faced during the 2007–09 financial crisis due to expected government infrastructure stimuli and an increase in e-commerce, while companies in the machine tools, plastics machinery, and steel production equipment sectors have been more negatively affected (Kronenwett 2020). In addition, the partial rebound in industrial production was boosted by a 107 percent increase in auto production in June 2020 (Board of Governors of the Federal Reserve System 2020, table 1).

• Six months into the COVID-19 crisis, we present 10 facts about the state of the U.S. economy.
• We highlight effects that COVID-19 has had on businesses, the labor market, and households.
• We conclude by considering how policy has supported businesses and families since March 2020.
• Taken together, these facts describe a joint economic and public health crisis of a scale and at a speed unprecedented in the history of the United States.