- US retail sales surged 9.8% in March to a record $619.1 billion, the Census Bureau said Thursday.
- The leap nearly doubles the median economist estimate of a 5.8% gain from a Bloomberg survey.
- Sales were bolstered by warmer weather and $1,400 checks included in Democrats’ stimulus plan.
- See more stories on Insider’s business page.
Warmer weather, reopening, and stimulus support converged in March to drive the strongest month of retail spending the US has ever seen.
Retail sales increased 9.8% last month to a record $619.1 billion, according to Census Bureau data published Thursday. The leap nearly doubles the median economist estimate of a 5.8% gain from economists surveyed by Bloomberg. February’s decline was revised higher to a 2.7% contraction.
The March reading sits 27.7% higher than that seen exactly one year ago. Sales dipped in March 2020 and hit their pandemic-era floor in April as initial lockdowns and fears of COVID-19 kept Americans from spending at physical stores.
Retail sales have been a key indicator for economic activity and became even more relevant amid the virus-induced restrictions. Such spending counts for roughly 70% of economic activity, and the rebound seen after the winter virus wave suggests the country can soon return to pre-pandemic strength.
Stimulus boost, redux
Last month’s upswing mirror that seen at the start of the year. Retail sales shot 7.6% higher in January as Americans deployed direct payments included in President Donald Trump’s $900 billion stimulus package. The climb snapped a three-month streak of declines and handily beat economist forecasts.
It appears the $1.9 trillion stimulus measure approved by President Joe Biden in March achieved a similar effect.
“With fresh stimulus checks in hand, consumers took advantage of warmer weather and increased vaccinations to splurge at car dealerships, shopping malls, restaurants, and home improvement stores,” Gregory Daco, chief US economist at Oxford Economics, said, adding the March reading only marks the beginning of the “consumer boom.”
Oxford Economics expects private spending to grow 8.4% through 2021 on the back of widespread vaccination and reopening. That would be the fastest growth rate since 1946.
Early data suggests Americans didn’t even use the full payments to drive the March increase. Stimulus check recipients only spent about 25% of the payments, according to researchers at the Federal Reserve Bank of New York. That’s less than the share spent from the previous two rounds of stimulus checks. Conversely, larger portions were diverted to savings.
The data is clear: The economy is recovering
The retail sales report caps a month that’s likely to mark a turnaround for the US economy. For the first time since the pandemic began, practically every economic release pointed to a broad and fast-paced recovery.
Consumer sentiment leaped to one-year highs as the vaccination rate improved and nicer weather allowed for a return to some pre-pandemic activities. Jobless claims tumbled to pandemic-era lows, and fell further still last week. The manufacturing sector continued to grow at a healthy pace, and the service businesses saw activity rebound after struggling through the winter.
Perhaps the most notable report came on April 2 from the Bureau of Labor Statistics. The agency reported a 916,000-payroll gain in March, beating estimates and marking the strongest month of job growth since August. Readings for January and February were both revised higher, and the headline unemployment rate fell to 6% from 6.2%.
To be sure, there’s still plenty of progress to make before the country is fully in the clear. The government’s monthly jobs report showed the economy is still down some 8.4 million payrolls from before the health crisis. Unofficial estimates that include misclassification and workers who dropped out of the labor force since February 2020 place that sum closer to 14 million. And while jobless claims continue to decline, they still sit at levels twice as high as those seen before the pandemic.
The Thursday spending data is an encouraging sign. Increased spending lifts businesses’ demand for workers and, in turn, accelerates hiring. The pace of vaccination continues to improve, and state and local governments are slowly relaxing their lockdown measures.
Coronavirus strains still present some risks, but the economy seems to be at an “inflection point,” Federal Reserve Chair Jerome Powell said Wednesday. Americans should keep socially distancing and masking up to ensure the country can effectively curb the virus’s spread, he added.