Retail Sales Jumped 5.3% in January, Far Higher Than Expected
Retail Sales Rose 5.3 percent in January, More than analysts and economists expect, is to provide a necessary setback to an economy that is showing signs of weakening at the end of last year.
Data released Wednesday by the Department of Commerce showed that a large jump in sales was most likely in the latest round of incentive checks mailed at the end of last year. The $ 600 check, in addition to some loosening of the virus outbreak and increased distribution of vaccines, helped customers return to stores and restaurants last month.
Pantheon Macroeconomics chief economist Ian Shepherdson called January “remarkable” and predicted that spending would continue to rise in the coming months as the country began to progress against coronoviruses and consumer sentiment continued to improve.
“The overall strength in numbers cannot be wiped out, as every retail category ended in December,” said Mickey Chadha, a retail analyst at Moody’s Investors Service, in an email.
Businesses ranging from auto dealers to department stores, which have struggled strongly to attract customers during the epidemic, have shown strong sales growth. Positive figures came after three consecutive months of retail sales Declines, Which worried policymakers that efforts to soften the financial effects of the epidemic were waning.
The deep drop around the holidays – with a 1 percent drop in sales in a typically strong month of December – prompted some economists to speculate that the economy was headed for a “double dip” recession until the federal The government did not provide much financial assistance to struggling consumers.
The latest round of stimulus was passed by Congress and in late 2020 President Donald J. After being signed by Trump, economists expected retail sales to rise 1.2 percent in January. But the incentive money appeared to quickly translate into more spending rather than savings.
Robert Fricke, a corporate economist at the Navy Federal Credit Union, estimated that at least half of the people had already been given incentive money. “The potential for expansion of unemployment benefits was without the work of those who worked without the confidence to save vs. spend.”
Higher-than-expected growth led to strong electronics sales, up 14.7 percent from December, and an increase in sales of furniture and household goods, up 12 percent.
Even restaurants, which were in the grip of the epidemic, saw strong sales in January, rising by about 7 percent – though they were down about 17 percent from their levels a year earlier.
The department stores were another standout, which saw a 23.5 percent increase in sales.
The retailers’ trade group, the National Retail Federation, called the incentive money a “lifeline”, but also urged the Biden administration to continue distributing the vaccines as soon as possible.
Even with some challenges ahead, several economists said on Wednesday that returns to consumer spending should be sustainable, which will help the overall economy as jobs will grow again.
Mr. Shepherdson of Pantheon Macroeconomics said the recent winter storm in the Southwest could lead to a drop in sales this month, but if he is currently overflowing with Congress from the Biden administration’s stimulus plan, he will be back again this spring. Can turn over.
Shepherdson wrote in a research paper, “This should be followed in the second quarter after a large increase as herd immunity approaches further deterioration and the fear of becoming seriously ill with Kovid decreases.”
He said, “Overall, families have more than enough cash – coming from the stimulus bill that we hope will pass in March – both for a steep discount on spending on services and for a continued increase in spending on goods.” ,” they wrote.