Retail sales in the United States jumped in January with the first growth in four months. This adds evidence that a rebound to the economy is in the picture after financial aid from the government helped influence spending and the number of coronavirus cases fell. Retail sales saw gains of 5.3% during the month of January, the largest increase in eight months, per government reported data on Wednesday. That number was forecasted to be around a 1% gain.
Nearly every category posted strong sales with department store cains, internet retailers, electronic stores, and home-furnishing locations recording double digit percentage gains. Bars and restaurants also saw a 7% increase after three straight months of decreases. Between the business restrictions and the cold of winter many restaurants struggled to the end of 2020. Now however some states are starting to ease restrictions again.
Sales at base retail stores rose by 6.1% when you exclude gas stations and auto dealers. Purchases in automotive and gas sectors swing more wildly and are able to hide underlying retail sales trends. For those two automotive sales rose by 3.1%, they account for almost 20% of all retail sales, and gasoline receipts rose 4% mostly due to higher prices. Finally there was a downward revision to December’s decrease from 0.7% to an even 1%.
Most of the increased spending was attributed to the $600 stimulus checks from the federal government that most Americans received as well as federal unemployment benefits being reengaged. Looser state level restrictions on businesses, brought on by decreases in trends and raw numbers of coronavirus cases, also impacted spending habits. It is likely that spending will continue in the months ahead.
Currently the Biden administration is readying it’s stimulus package that includes $1,400 checks to Americans as part of a $1.9 trillion package. Cases are declining at this point, and about 16% of the country has been vaccinated. This should help pave the way for a stronger recovery later this year. Consumer spending as a whole accounts for 70% of the American economy, with retail sales accounting for about a third of that.
Katherine Judge of CIBC Economics made a statement that, “With additional fiscal stimulus on the way, new Covid cases trending lower, and many states moving to relax social distancing measures, the worst looks to be in the rear view mirror, with spending on services in particular poised to benefit in the months ahead.” Meaning the worst of this pandemic may be ready for the history books.