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Stimulus Checks Fuels Spending, March Retail Sales Rise 9.8%

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While coronavirus-inflicted challenges persist, the two-pronged approach of massive stimulus package and mass inoculation drive buoyed consumer spending activity with retail sales witnessing a sharp upswing in the month of March. As business activities resume and coronavirus-induced restrictions ease, Americans flocked to restaurants and bars, bought apparels, spent on gasoline, and purchased sports equipment, furniture and electronics and appliance. Sales at auto dealers were also strong.

The Commerce Department stated that U.S. retail and food services sales in March rose 9.8% sequentially to $619.1 billion, following a revised reading of 2.7% decline in February. Markedly, this was the best monthly gain in retail sales since May last year, when the initial lockdown measures were lifted. Also, March sales results handily beat analysts’ expectations.

Evidently, the passing of a coronavirus relief package worth $1.9 trillion that entitles eligible Americans to $1,400 stimulus checks has triggered spending across the board. Clearly, demand was not restricted to a few categories as was noticed when the coronavirus crisis gripped the economy. Reopening of the economy and gradual return to active social lifestyle, events and occasions are likely to have spurred demand.


Impressively, all 13 categories showed sequential growth, as consumers filled their shopping carts. We note that U.S. retail sales surged 27.7% from March last year. Sales at Internet retailers rose roughly 28.7% on a year-over-year basis as more people opted for e-route over physical retailing amid the pandemic.

Surge in retail sales added to the optimism stemming from the addition of 916,000 jobs in March and the decline in unemployment rate to 6% from 6.2% in February. The data highlights that the economy is steadily gathering momentum, unless untoward coronavirus incident derails the same. We also believe that Biden's $2 trillion infrastructure plan will revitalize the economy and help create more jobs.

Well for now, easing of COVID-induced restrictions and with people back on streets, consumer spending activity — one of the pivotal factors of the economy — is likely to remain strong. In fact, U.S. retail sales are projected to increase 6.5-8.2% to more than $4.33 trillion in 2021, per National Retail Federation (NRF). NRF president and CEO Matthew Shay said, “Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending.”

Evidently, retailers will be the ultimate winners. To name a few, Abercrombie & Fitch Co. (ANF - Free Report) , L Brands, Inc. (LB - Free Report) , Rush Enterprises, Inc. (RUSHA - Free Report) , Conn's, Inc. (CONN - Free Report) and The Buckle, Inc. (BKE - Free Report) are likely to gain from buoyant consumer spending environment.

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