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A person walks by a store displaying a sale sign on Jan. 8, 2021 in New York City. Angela Weiss/AFP via Getty Images
COVID-19

Retail sales jump 5.3%, thanks to $600 stimulus checks

Associated Press Feb 17, 2021
A person walks by a store displaying a sale sign on Jan. 8, 2021 in New York City. Angela Weiss/AFP via Getty Images

The $600 stimulus checks got Americans shopping again.

After three months of declines, retail sales soared a seasonally adjusted 5.3% in January from the month before, the U.S. Commerce Department said Wednesday. It was the biggest increase since June and much larger than the 1% rise Wall Street analysts had expected.

The $600 stimulus checks, sent out at the very end of last year, has pushed people to buy new furniture, clothing and appliances.

Darryl Crum bought a new washing machine with his stimulus money, since his old one wasn’t spinning clothes well enough anymore. He chose a model that was made in America and bought it from a family-owned store instead of the major chain he usually gets appliances from.

“As I see it, the goal was to stimulate the economy,” said Crum, who is retired and lives in DeKalb, Illinois. “And I contributed.”

How long spending will continue without more stimulus checks remains to be seen.

Retail sales slumped in the last three months of 2020, as stimulus money dried up, job growth was nonexistent and a surge in virus cases kept people away from stores during the critical holiday shopping season. In fact, the Commerce Department said Wednesday that December’s drop was actually larger than it first reported, revised to be down 1% instead of a 0.7% drop.

More stimulus could keep Americans spending. President Joe Biden is trying to push through a $1.9 trillion stimulus plan, which would include $1,400 in direct payments to most Americans. The U.S. job market is still weak: Employers added just 49,000 jobs in January after losing 227,000 jobs the month before, the first loss since April.

Besides strong sales at furniture and appliance stores, sales jumped an eye-popping 23.5% at department stores after slumping 3% in the last year. Online sales soared 11% and spending at restaurants, which have been hard hit by coronavirus restrictions, rose 6.9% last month.

Wednesday’s report covers about a third of overall consumer spending. It doesn’t include haircuts, hotel stays and other services, which have been badly hurt by the pandemic.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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