US personal spending fell by the most on record in March as consumers stayed home

• Personal consumption expenditures fell 7.5% in March, according to a report released Thursday by the Commerce Department.
• It's the largest drop on record for the measure, which accounts for roughly 70% of US gross domestic product.
• The report reflects the effects of major lockdowns that swept across the US in March to slow the spread of COVID-19.
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US personal spending plunged in March as the coronavirus pandemic kept consumers at home and left millions without a job.

Personal consumption expenditures fell 7.5% in March, outpacing the median economist estimate of a 5.1% drop, according to a report released Thursday by the Commerce Department. It's the largest drop on record for the measure, which accounts for roughly 70% of US gross domestic product. Personal incomes also slipped 2% during the month.

"In one line: half the storm," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a Thursday note.

The report reflects the impact of major lockdowns that swept across the US in March to slow the spread of COVID-19. Restaurants, entertainment, and all other non-essential businesses were closed, keeping consumers from spending.

In addition, continued elevated unemployment has left many American workers without a paycheck, weighing down spending. The weekly jobless claims report, also released Thursday, showed that in just six weeks, 30 million Americans have filed for unemployment insurance. Roughly 10 million of those filings took place in March.

On Wednesday, data released showed that the US economy shrank 4.8% in the first quarter, before the biggest impact of the coronavirus pandemic hit — the report included only January through March. It means that the worst is likely yet to come for both GDP and consumer spending, as the US was on lockdown for only the last two weeks of March.

Read more: A fund manager who's beating the market by betting on tiny companies says coronavirus 'turbocharged' the trends driving his portfolio. He told us what they are, and the 3 stocks he's most bullish on.

The Thursday personal spending report was weighed down most by a drop in spending on durable goods, which declined 14.8% in March. At the same time, spending on services slumped 9.5%.

The personal saving rate jumped to 13.1% during the report period to a 39-year high as the result of spending falling much faster than incomes. That may help the economic recovery, especially as some states this week began to slowly reopen parts of their economies.

"The saving rate likely will jump again in April, leaving substantial scope for spending to rebound strongly from June onwards, if the gradual re-openings now underway can be sustained and broadened," Shepherdson wrote.