A buyer wearing a face mask goes to a Costco store in San Francisco, California, on Wednesday, March 3, 2021.
David Paul Morris | Bloomberg | Getty Images
March retail sales are expected to be strong and some economists say stimulus controls could have entered the economy quickly, contributing to a gain of even more than 10% or more.
March sales data, released on Thursday at 8:30 a.m. ET, could be the first in a series of strong consumer spending reports as vaccinations increase and economic reopening continues. The $ 1,400 fiscal stimulus checks sent to individuals since mid-March appear to have boosted spending in a cumulative demand environment.
“We expect the March retail sales report to be remarkable, with both primary and core retail sales rising by more than 11% month after month,” Bank of America economists wrote. “Stimulation, reopening and better weather have served as a powerful cocktail for consumer spending.”
An explosion of several months of consumer spending is expected to start an economy that is expected to thrive this year. The strongest growth is expected in the current quarter, which some economists say could see a 10% increase in gross domestic product. This compares with the second quarter of last year, when economic downturns led to a collapse of the economy, with GDP falling by 33.3%.
Economists expect March retail sales to grow by a consensus of 6.1% or 5.3%, excluding cars, according to Dow Jones. This compares to a 3% drop in sales in February, when severe winter weather led to freezing in the south, with massive power outages in Texas.
But some economists say spending data show sales could be even stronger. “It will increase by more than 10%. Except for May last year, it will be a record. There are a lot of vehicle sales, higher gasoline prices and then everything else,” said Mark Zandi, chief economist at Moody’s Analytics. “Restaurants are coming back. Clothing stores have grown a lot. This is the retail reopening and that will be reflected in numbers.”
Zandi said retail sales are expected to increase by 10.3% from February and are expected to increase by 28% from a year ago.
“It’s reopening. It’s stimulating money. It’s a refund of time, combining everything to be a gangbuster number,” Zandi said. “I think we will see very strong numbers in the future. We are gone and we are running.”
Zandi said spending data between companies supports his view. According to the software company Cortera, recently acquired by Moody’s, the expenses of all companies in March increased by 14.5% compared to last year, while the expenses of retailers increased by 9%.
Zandi said retailers and other businesses, such as airlines that benefit from a reopening of the economy, fared better in March than those businesses working to work from home for the first time since the start of the pandemic.
“Expenditures have risen in most retail segments, while restaurants, furniture stores, clothing stores, gas stations and sporting goods stores are leading,” according to Cortera. “Declining spending was seen in food and beverage stores as consumption moved back to restaurants and bars.”
Cortera, which tracks about $ 1.7 trillion in business spending, found that spending was 14.6 percent lower than last year for food and beverage stores, but food and beverage services such as bars and restaurants , increased, spending just 20% more than last year.
Bank of America credit card spending also showed an increase in late March. BofA economists said there was a 67% increase in card spending over the seven-day period ended April 3. Expenditures in that period were also 20% higher than in the same period in 2019.
“Animal spirits have risen sharply, with the conference board’s confidence measure rising to 109.7 in March, the highest gain in a month since April 2003,” Bank of America economists said. “Consumers can increase spending as savings grow – we believe the savings rate will be around 20% – if not even higher – in March.”
NatWest chief economist Kevin Cummins said he expects a 10% increase in March sales and acknowledges that he is at the end of the forecast. He expects sales to be boosted by $ 1,400 stimulus checks sent to individuals, who began reaching bank accounts around March 17.
“The end of the month should be very strong,” he said. “If you look at car sales, this has been the highest level in four years. It seems that restaurants are becoming more crowded with outdoor seating.”
The forecast range is unusually wide, with economists expecting gains of 4% to 11.5%. This means that the market reaction could be volatile.
“Normally, prepandemic, the range could be 1 percentage point [apart]”Maybe 2,” said Michael Schumacher, Wells Fargo’s director of rates.
Bank of America economists said retail sales data could spark another debate over whether the business will raise spending to lift the economy after rising consumer spending.
“With data confirming consumer power, the debate is now moving to the next stage of recovery,” Bank of America economists note. “Will this prove to be just a high level of sugar with a painful hangover or will it trigger a positive feedback loop leading to a lasting recovery? We expect the latter, but it will depend on a positive response from Corporate America. “