Brace For A Brutal Drop In Retail Sales

More than two weeks ago, when looking at the latest real-time card spending data from Citi to get a sense of how big the impact from the recent bank stress was on US household spending (which as a reminder is responsible for 70% of US GDP), we warned that tomorrow's retail sales would be dire. For those that missed it, in the latest "Citi's Credit Card Insights" (available to professional subs) report, Citi's Paul Lejuez wrote that the bank's credit card data for the 16 sub-sectors it tracks showed that total spending in March wk 3 (ended 3/18/23) decreased 10.3%, a big deceleration vs March wk 2 (-6.8%), and driven by a high-single digit decline in transactions. Ex-Food, spending decreased even more, tumbling by 13.0% vs -8.1% in March wk 2.

As Lejuez added, "This was the first week of data following the disruption within the financial sector, and we were curious if it might have had an impact on the consumer. It sure did" and as Citi goes on to note, the third week of March, and the first week after America's regional banks imploded, "was the biggest decline in total retail spending we have seen since the pandemic began (April 2020)."