US retail spending likely rose again in April

US buyers likely increased spending at retailers in April, as the recovery continued to strengthen, but at a slower pace since early spring, when stimulus money reached most households.

Economists expect a Commerce Department report to be released on Friday to show retail sales – a measure of purchases in stores, restaurants and online – rose 0.8% in April. This would represent a marked slowdown from the 9.8% advance in March.

The surge in retail spending in March came as the government distributed hundreds of billions of dollars in direct cash payments to households. This was similar to a sharp rise in retail sales in January, following a separate round of direct payments authorized by Congress at the end of 2020.

Stimulus checks “have dug a hole in the pockets of consumers in these months and contributed to big, big increases” in retail sales, said Tim Quinlan, senior economist at Wells Fargo..

“The immediate sugar level resulting from the stimulus may subside.”

Economists expect pent-up demand after months of government restrictions on business and activity, along with large savings stocks for some households, to boost robust consumer spending in the coming months, d ‘especially as establishments in the service sector are allowed to function more fully.

There are positive signs for the economy as the United States moves towards a full reopening. Unemployment benefit claims continued on a downward trajectory towards pandemic lows. State and local governments have further eased restrictions on businesses as coronavirus vaccines circulate and the number of virus cases declines. On Thursday, the Centers for Disease Control and Prevention said fully vaccinated people generally did not need to wear a mask or socially distance themselves during indoor or outdoor activities.

Bernard Flynn, owner of Trident Booksellers & Cafe in Boston, said a resumption of the business he started seeing at Mach continued. The store’s sales fell 50% in 2020, earlier in the pandemic, compared to 2019, Mr Flynn said. Now sales are down about 25%, he said.

Mr Flynn said he noticed an increase in visitors who were travelers staying at nearby hotels, as well as other shoppers keen to go out.

“People are so happy to go and buy something. We see a lot of that: people are just excited to browse a bookstore, ”he said.

Mr Quinlan, of Wells Fargo, said spending should increasingly move away from goods – which consumers have flocked to during the pandemic – and turn to services, as people can spend more time at outside the house.

“All of this is leading to a very significant shift in service spending back online,” he said.

A bank of America credit and debit card spend tracker showed spending at department stores seasonally-adjusted 28% in April compared to March, while spending on clothing and furniture also fell. Spending on restaurants and accommodation, however, jumped, as did spending on airlines, which rose 23%.


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Retail sales, excluding motor vehicles and gas stations, rose 43% in April, compared to the same month in 2020, when parts of the economy were shut down due to the pandemic, according to Affinity Solutions, a data company that tracks credit. and debit card spending.

Sales in restaurants and bars in April more than doubled during the year, according to data from Affinity. Compared to 2019 levels, the number of US restaurants reopened has hovered above 80% daily since the end of April, according to data from OpenTable, the reservation platform.

The recovery of the economy remains uneven, however. Hiring unexpectedly slowed down last month. Consumer prices have also surged, raising fears that inflation will accelerate faster than expected by the Federal Reserve.

“Inflation is a big concern. As we know, as prices go up, it’s really going to erode the purchasing power of consumers, ”said Lindsey Piegza, chief economist at Stifel.

The IRS sent about 90 million stimulus checks to Americans in March. WSJ chief economic commentator Greg Ip explains why stimulus checks alone are unlikely to boost inflation. Photo illustration: Carlos Waters

Fed officials said the price spike was likely temporary and that the central bank had tools to fight inflation if inflation rose too much.

Meanwhile, they have signaled that their easy money policies, including keeping interest rates low, will stay in place until the job market heals better.

“The Fed cannot keep rates low and continue to stimulate growth and raise rates to combat persistently high inflation,” Ms. Piegza said. This potentially causes a political conundrum for the Fed, she said.

Meanwhile, some employers have said they are struggling to hire workers as business picks up.

Mr Flynn, the owner of the Boston-based company, said he was adding workers in anticipation of further easing of government mandates. He said he recently gave his kitchen staff increases and increased his starting salary from $ 1 to $ 16 an hour to attract new workers. Since then, he has been able to recruit several new collaborators, he said.

“We are hiring now with the expectation that the restrictions will be lifted,” he said. “As soon as they remove the restrictions, we’ll be doing a lot of business. I think the pent-up demand is there, ”he said.

Write to Amara Omeokwe at [email protected]

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