March 2021 retail sales explode as consumers use incentive controls

A new round of stimulus controls boosted consumer purchases in March as the US economy continued to squeeze out of Congress’ aggressive spending.

Advanced retail sales rose 9.8 percent for the month, the Commerce Department said on Thursday. This is compared to the Dow Jones estimate of a 6.1% increase and a 2.7% decline in February.

Sporting goods, clothing and food and beverages led to higher spending and contributed to the best month for retail sales since the May 2020 gain of 18.3%, which came after the first round of stimulus checks.

A separate report showed that the first unemployment insurance deposits fell, with the Department of Labor reporting 576,000 new unemployment claims for the week ended April 10. This was easily the lowest total in the first days of the Covid-19 pandemic and was a decrease from the total number of 769,000 in the previous week.

The Dow Jones estimate was 710,000.

As the job picture brightened, consumers took their $ 1,400 incentive checks and spent aggressively. The money came from a nearly $ 1.9 trillion US bailout law passed by Congress in March.

The legislation has received full stimulus and rescue payments approved in the year the Covid-19 pandemic began at about $ 5 trillion, fueled by red ink that tax authorities say is needed to keep the economy running.

Monthly spending had a broad base, with sales up nearly 28% from March 2020, as pandemic-related business closures began.

The critical bar and restaurant industry grew by 13.4%, due to the increasing relaxation of restrictions, as Covid vaccines are accelerating at a rate of over 3 million per day.

Expenditures on sporting goods were the highest winning percentage, at 23.5%, followed by clothing and accessories at 18.3% and car parts and dealers at 15.1%.

The March retail sales report was another sign that consumers in general remain healthy and willing to spend, even as increasing amounts of incentive checks are directed towards savings rather than spending.

“Expenditures will almost certainly fall in April, as part of the stimulus momentum will disappear, but with the rapid launch of vaccination and the financing of households in a strong form, we expect the general increase in consumption to continue to return quickly in the second quarter, “wrote Michael Pearce, senior American economist at Capital Economics.

A recent report from the New York Federal Reserve showed that incentive recipients expect to save 41.6% of their checks and spend 24.7%. After the first round of checks in the spring of 2020, consumers saved 34.5% and spent 29.2%.

As the recovery gained rapidly, consumers had to deal with the strongest signs of rising inflationary pressures. The consumer price index rose by 2.6% in March compared to a year ago, partly due to higher petrol prices. The year-on-year gain was the highest since August 2018.

Thursday’s economic data also showed more signs of thawing in the labor market.

The sinking of unemployment claims has generated the lowest weekly number since March 14, 2020, right after the official declaration of the pandemic. Almost two weeks later, weekly debt deposits would exceed 6.15 million, slightly the worst week in US history.

Since then, the job market has improved dramatically, with the unemployment rate falling from a pandemic peak of 14.7% to its current 6%. The addition of 916,000 non-farm payrolls in March has raised more hopes that healing will accelerate.

Despite the large decrease in weekly receivables, receivables continued to change slightly to 3.73 million.

The four-week moving average for weekly receivables fell to 683,000, also the lowest since March 14.

The total for those receiving benefits under all government programs fell by more than 1.2 million to 16.9 million for the week ended March 27. This decline was mainly due to declines in pandemic programs.