The COVID-19 shutdown sent another 4.4 million people to the unemployment rolls last week, bringing the five-week total to a staggering 26 million.
In its weekly update on joblessness, the Labor Department said the “insured unemployment rate” stood at 11 percent. Unemployment benefits have been bolstered by Washington’s efforts to blunt the coronavirus fallout and in general give people who lost their jobs a portion of their prior income.
The sudden surge in joblessness is both a problem that retail has contributed to by furloughing workers and also a worrisome component for at least the near-term consumer outlook.
Whenever retailers do start to open their doors — and there are some tentative steps in that direction — they’re going to be catering to a traumatized consumer. Instead of rushing out to go shopping once the lockdown eases, many consumers will be worried about their health or struggling to right their finances after at least temporarily losing their jobs or seeing their salaries cut.
The economy is seen as already in a recession; the key question is just how deep it goes and how long it lasts. And even when the consumer does start to loosen up, a second wave of COVID-19 could come back this fall and winter and shut everything down again.
The unprecedented level of uncertainty has retailers struggling for a way forward. Already costs have been cut to the bone and payments to vendors and landlords delayed. The very strongest are looking at how they can take advantage of the market to maybe buy a competitor while those who can have taken on additional debt to hold them over. The rest are simply holding on until stores reopen.
That is just barely starting to happen.
Belk department stores in South Carolina and Arkansas will reopen May 1 after being closed for weeks after South Carolina Republican Gov. Henry McMaster gave the green light for nonessential stores to reopen as of April 21.