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• S. total retail sales turned in a shockingly bad performance in April. They were -15.1% month to month and -17.8% year over year. Among sub-categories, though, something happened that has been in the works for a while, but was remarkable to observe, nonetheless. ‘Nonstore retail sales’ (i.e., purchases made over the Internet and by way of e-auctions), for the first time in history, took over number one spot for share of total retail, at 21.1%. Second place went to ‘food and beverage stores’, 19.1%. Dropping to third, versus its usual frontrunner status, was the shopkeeper category, ‘motor vehicle and parts dealers’, 18.4%.
• Also, April’s grocery store sales were -13.1% month to month, after being +26.9% in March. A significant number of shoppers in March engaged in frenzied stockpiling. With the economy headed into a freeze, they were already seeing and anticipating further shortages – never mind that it was a self-fulfilling prophecy. Single seeds of hoarding can quickly grow to become pernicious weed patches of off-the-grid accumulations. April’s m/m decline in grocery store sales, though, suggests a dialed down urgency to build and maintain a home-inventory security blanket.

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• Matters pertaining to who is owed what due to the coronavirus crisis will soon fully engage the legal and insurance professions. But there is a segment of the business community, ‒ although more truly it’s off to the side, keeping an eye on things (i.e., companies and governments) ‒ that is about to step into the spotlight. The weight of the world, and I don’t say that lightly, is about to descend on debt rating agencies.

• Standard & Poor’s (S&P), Moody’s, Fitch Group and others will be tasked with hair-raising responsibility. Debt is skyrocketing throughout the private and public sectors. A corporation or government receives a ratings downgrade (i.e., starting from Triple A and descending from there) when it is judged to be at greater risk of defaulting on its debt obligations (loans or bonds). The greater risk assessment forces it to pay more in carrying costs, regardless of whether the central bank is managing to keep its official interest rate low and stable.

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• Canada has been announcing its economic support measures piecemeal. First up was the Canada Emergency Response Benefit (CERB) to provide income aid for individuals newly laid off or unable to find employment for a variety of reasons, including a need to stay home and look after children released from school attendance. Following in short order have been payroll supplements to help businesses survive, measures to assist students who won’t be able to find summer jobs, rent relief for commercial tenants in danger of defaulting and extra cash to be sent to seniors.

• Most recently, there has been the LEEFF (Large Employer Emergency Financing Facility) initiative, providing bridge financing for some of the nation’s largest corporations. To qualify, companies must agree to conditions placed on dividend payouts and executive compensation and to be on board with environmental cleanup goals. There’s also expansion of BCAP (the Business Credit Availability Program) to include more mid-sized firms. Canada’s fiscal deficit this year (April 1, 2020 to March 31, 2021) is expected to be -$250 billion.

Read the rest of The Economy under COVID-19: Notes from the Trenches (38) (May 20)

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• The U.S. seasonally adjusted (SA) unemployment rate in April was 14.7% and the not seasonally adjusted (NSA) figure was 14.4%. Both those numbers understate the true out-of-work situation in the country.

• Crucially, the labor force participation rate in the U.S. dropped from 62.6% in March to 60.0% in April (both NSA). When asked by the Bureau of Labor Statistics (BLS) in its ‘household’ survey if they were actively seeking work, 6.9 million individuals responded in the negative. They didn’t see any point. They didn’t believe they had any prospect, under coronavirus pandemic circumstances, of gaining a position at this time. Many of those respondents were young adults newly laid off in the hotel, restaurant and bar business. ‘Not seeking employment’ meant they were excluded from the labor pool. If the participation rate in April had stayed the same as in March, America’s NSA unemployment rate would have been 18.1%.

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• Apple and Google, through iOS and Android, operate the largest cell phone ‘ecosystems’ in North America. Those two firms are working jointly to further develop smart phone geo-locating technology to facilitate tracking the spread of COVID-19.

• Michael Bloomberg, of Bloomberg News and former-Mayor-of-New-York fame, has also committed his valuable time and considerable financial resources to developing a contact tracing program. A philanthropic arm of his business empire will be working closely with Johns Hopkins University and Medical Center.

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