- April vehicle sales improved at month’s end.
- Unemployment rises to Great Depression levels.
- GDP and consumer spending fall.
The peak in daily new COVID-19 cases was over a week ago, so case growth is on a declining but inconsistent trend. Meantime, the economic fallout is evident in negative growth and record unemployment.
Progress in slowing the virus is inconsistent as individual markets each have their own unique pandemic curves. Testing is ramping up but remains inadequate.
GDP decline: The damage to the economy can be seen in the 4.8% decline in GDP in the first quarter and the record drop in consumer spending in March. 30.2 million Americans have applied for unemployment compensation over the last six weeks through April 24.
Joblessness soars: The employment report in April will set a record for job losses and could see the unemployment rate rise to levels not seen since the Great Depression. The rest of the year could see some recovery, but it will depend on how the pandemic plays out. Personal income fell 2%, which was the largest decline in income since January 2013. Beneath the income decline, wages fell, but government payments jumped.
Vehicle sales fall: Not all data are available to do a complete assessment of April’s new-vehicle sales. From the data we do have, volumes appear down about 50% year over year. The new-vehicle SAAR was estimated by Wards at 8.6 million, down from last month’s 11.4 million but much better than the consensus forecast for under 7 million. The SAAR of 8.6 is still a new record low. Improving momentum at month-end kept the SAAR from being worse. Read the team’s commentary on April U.S. auto sales.
Sentiment stabilizes: Consumer sentiment stabilized and improved slightly in the back half of April. Our leading indicators show that April ended much better than it began.
Spending decreases: Consumer spending in total declined 7.5% in March with big declines in durable goods and services alike. Spending on food and other non-durable goods increased but did not offset the larger declines in other categories and especially in discretionary services. The spending decline was the largest in the history of the data back to 1959.
Looking ahead: This week is big for important data on April, ranging from full details on new-vehicle sales, our own Manheim Used Vehicle Value Index report and used-vehicle sales, new jobless claims, and the April employment report.