Retail sales rose in January as consumers spend heavily on stimulus checks
Consumers flocked to spend their stimulus checks in January, sending retail sales up 5.3% for a month in a blockbuster start through 2021, according to a government report on Wednesday.
Economists polled by Dow Jones expected an increase of only 1.2%.
Excluding cars, sales rose 5.9%, also well above the 1% estimate, driven by an unexpected strength from the consumer.
A month after Congress approved an additional $ 900 billion stimulus package on top of the $ 2.2 trillion approved in early 2020 to counter the effects of Covid-19, buyers were greeted with $ 600 billion Armed checks with which they bought a wide variety of goods.
The surge in consumer spending came at a time when growth expectations were dampened in early 2021 as the economy continued to shake off the slowdown caused by the pandemic.
Spending gains were broad-based, with increases in each major category.
Electronics and home appliances saw the largest increase over the month, up 14.7%, while furniture and home furnishings stores grew 12% and online retailer spend 11%. Even food and drink options, which suffered the worst during the pandemic, saw a 6.9% increase.
Compared to the previous year, bars and restaurants were still damaged with a decline in sales of 16.6%. Apparel and accessories were also down 11.1%, while electronics and home appliances were down 3.5%.
Online shopping is the biggest gain since January 2020, up 28.7%, while building materials rose 19% and sporting goods rose 22.5%.
While most economists are slow to start the year, they expect the pace to accelerate later in the year as vaccination efforts spread and the Covid-19 albatross subsides.
One of the main problems facing the recovery is inflation, and a separate data point showed that these pressures continue to increase.
The producer price index, which measures the prices domestic producers get for their goods, rose by 1.3%. This is the largest monthly gain since the measure began in December 2009.
Correction: In an earlier version, the profit when shopping online was incorrectly stated compared to the previous year.