Apparently buoyed by the latest round of stimulus checks, U.S. retail sales jumped the most since June last month, outpacing economists’ expectations and providing some positive news for a downtrodden economy.
Monthly retail and food service sales rose 5.3% to $568.2 billion in January—the biggest percentage increase since June and the first month-over-month gain in four months, according to data released by the U.S. Census Bureau Wednesday. The jump was well over the 2.1% growth forecasted by economists at Moody’s Analytics.
The unexpectedly strong numbers reflect the recent influx of government relief as well as fewer pandemic-related restrictions on activity, economists said. Last month most taxpayers received a stimulus check of up to $600, and the federal government reinstated a weekly supplement to unemployment benefits for those without work.
“American shoppers blew the doors off retailers in January,” BMO Capital Markets Senior Economist Sal Guatieri wrote in a commentary. “Evidently, instead of saving their [stimulus checks], many households treated themselves after a less-than-merry holiday season.”
With consumer spending typically accounting for more than two-thirds of the U.S. economy, retail sales are a critical indicator of where it’s headed. The data suggests that people are ready to spend the cash they’ve been stashing away sooner than expected, and could brighten the outlook for economic growth in the first quarter, according to Guatieri.
Compared to January 2020, sales grew 7.4% in the largest year-over-year increase since 2011, according to Moody’s economist Scott Hoyt, who called the growth “stunning” in a commentary.
Department store sales grew 23.5% month-over-month, and sales at electronics stores, furniture stores and online retailers all saw double-digit growth. Restaurants and bars—some of the businesses hardest hit by the pandemic and related restrictions—increased sales 6.9% month-over-month, although they were still 16.6% lower than in January 2020. Sales rose in all 13 sectors tracked by the Census Bureau.