U.S. retail sales had their best showing in nearly a year last month, powered by a fresh round of stimulus checks and growing optimism about the economy.
Monthly retail and food service sales grew 9.8% from February, jumping to $619.1 billion, according to seasonally adjusted data released by the U.S. Census Bureau Thursday. March’s growth outpaced the 5.8% jump economists had expected, according to a median estimate cited by Moody’s Analytics, and was the second largest in 29 years of Census Bureau data. Only May 2020, when the economy began reopening following the pandemic’s onset, had a larger increase, at 18.3%.
Every segment posted gains last month, with increases of 23.5% at sporting goods and hobby stores, 18.3% at clothing stores, 15.5% at motor vehicle dealers, and 12.1% at home improvement and garden centers. Restaurants and bars, some of the hardest-hit businesses during the pandemic, saw business jump 13.4% in March. Grocery stores, meanwhile, posted the weakest growth of any industry, at 0.5%.
March’s retail sales data shows that consumers increasingly want to get out and spend and that government aid has helped them do just that. Stimulus checks and increased unemployment insurance checks have been vital to retail sales so far this year, economists said, pointing to a decrease of 2.7% in February sandwiched between stimulus-fueled booms in January (7.7%) and March. The effect of the checks may continue to spill over into April, too, further strengthening the economy’s recovery.
“Everybody wins when consumers are flush with stimulus checks,” Wells Fargo economists Tim Quinlan and Shannon Seery wrote in a commentary.
After that, it likely will be up to consumers to tap into savings they’ve accumulated during the pandemic, and there may be plenty of opportunity to do so as travel and hospitality businesses continue to reopen in the coming months. The economy’s potential has analysts adjusting their expectations ever higher, with Wells Fargo saying a spending boom in 2021 “will rival any in living memory for most Americans.”