Retail Gross sales Jumped 5.3% in January, Far Increased Than Anticipated

Retail sales rose 5.3 percent in January, well above the expectations of analysts and economists. This was the necessary upswing for an economy that showed signs of slowing late last year.

The big jump in sales reflected in the data released by the Commerce Department on Wednesday was most likely triggered by the latest round of stimulus checks that were sent out late last year. The $ 600 checks, in addition to some lessening of the virus outbreak and the increasing spread of vaccines, helped keep customers coming back to stores and restaurants last month.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the January surge “remarkable” and forecast that spending would continue to rise in the coming months as the country made strides against the coronavirus and consumer sentiment continued to improve.

“The overall strength of the numbers cannot be emphasized enough as every retail category rose in December,” Mickey Chadha, retail analyst with Moody’s Investors Service, said in an email.

Companies, from car dealers to department stores, that struggled to attract customers during the pandemic saw strong sales growth. The positive numbers came after three straight months of falling retail sales, worrying policymakers that efforts to mitigate the financial impact of the pandemic were failing.

The deep drop around the holidays – with sales dropping 1 percent in the typically strong month of December – led some economists to predict that the economy would be heading for a “double dip” recession unless the federal government allowed ailing consumers more financial aid Support.

After Congress passed the final economic round and signed it by President Donald J. Trump in late 2020, economists expected retail sales to rise 1.2 percent in January. But stimulus money quickly seemed to turn into more spending than savings.

“At least half of the stimulus money sent to individuals has already been spent,” estimates Robert Frick, a corporate economist with the Navy Federal Credit Union. “The expansion of unemployment benefits likely gave those without work the confidence to spend or save money.”

The main reason for the unexpectedly strong increase was the strong sales of electronics, which rose by 14.7 percent compared to December, and of furniture and furnishings, which rose by 12 percent.

Even restaurants, which are among the hardest hit by the pandemic, recorded a sharp rise in sales of around 7 percent in January – although they were almost 17 percent below the level of the previous year.

Department stores were another highlight, with sales up 23.5 percent.

The retailers’ trade group, the National Retail Federation, called the stimulus money a “lifeline” but urged the Biden government to distribute the vaccines as soon as possible.

Despite some challenges ahead, many economists said on Wednesday that the consumer spending rebound should be sustained in order to stimulate the overall economy if jobs grow again.

Pantheon Macroeconomics’ Mr Shepherdson said the recent winter storms crippling the Southwest could dampen sales this month, but could rebound again this spring if more financial support flows from the Biden government’s stimulus plan, which is currently being drawn up by the Congress.

“Greater gains should then follow in the second quarter, as the herd immunity approach can lift more restrictions and reduce people’s fear of becoming seriously ill from Covid,” Shepherdson wrote in a research report.

“Overall, households have more than enough cash – and more will come from the business cycle, which we expect to pass in March – to fund both a huge rebound in spending on services and a further surge in spending on goods.” , he wrote.