March retail sales soar 9.8% thanks to relief payments
Newly vaccinated and armed with $1,400 stimulus checks, Americans went on a spending spree last month, buying new clothes and going out to eat again.
Retail sales surged a seasonally adjusted 9.8% after dropping about 3% the month before, the Commerce Department said Thursday. The rise in March was much better than the 5.5% increase Wall Street analysts had expected.
Thursday’s report, which covers about a third of overall consumer spending, is the latest sign that the economy is improving as vaccinations accelerate, business restrictions are relaxed and more people are willing to head out to shop or eat. Employers, for example, added 916,000 jobs last month, the most since August. And U.S. consumer confidence surged in March to the highest level in a year.
A third round of stimulus checks was sent out beginning in the middle of March, with most adults receiving $1,400. So far, about 159 million direct payments have been paid out to households, totaling $376 billion, the U.S. government said.
The New York Federal Reserve Bank, which surveyed more than 1,000 people, said households planned to spend about a quarter of their most recent stimulus checks on goods. The rest of the money would be used to pay down debt or put aside for savings.
Teresa Golden of Renton, Washington, said she used the first two stimulus checks to catch up on rent and bill payments. With the most recent one, she spent $500 on Levi’s jeans, Old Navy clothing and shoes from Finish Line. Another $500 went to restocking her pantry with things that will last a long time on the shelf, such as ketchup, sugar, spices and Clorox wipes.
“I finally caught up on my bills and could go on a bit of a spending spree,” says Golden, who works in accounts receivable at a school system.
Americans spent their cash on cars, eating out and home renovations, according to the Commerce Department. But sporting goods stores saw the biggest jump in sales, up 23.5% in March from the month before. It was followed by clothing stores, where sales soared 18.3%.
That’s welcome news for clothing sellers, which lost sales last year after having to temporarily shut their stores at the start of the pandemic. Companies have said people are starting to socialize again and are using their stimulus checks for new outfits.
Levi Strauss said shoppers are buying up wide leg and loose fitting jeans as they emerge from a year stuck at home. At Macy’s, there’s more demand for dresses as proms and weddings resume. And teen retailer American Eagle said sales are rising due to “pent-up” demand for its fashions.
But not all retailers are benefiting: Bed Bath & Beyond, the seller of sheets and shower curtains, said this week that most of its customers don’t qualify for stimulus checks, and those that do are spending them on food, clothes and gadgets, stuff the company doesn’t sell much of.
COVID-19 Economy FAQs
Millions of Americans are unemployed, but businesses say they are having trouble hiring. Why?
This economic crisis is unusual compared to traditional recessions, according to Daniel Zhao, senior economist with Glassdoor. “Many workers are still sitting out of the labor force because of health concerns or child care needs, and that makes it tough to find workers regardless of what you’re doing with wages or benefits,” Zhao said. “An extra dollar an hour isn’t going to make a cashier with preexisting conditions feel that it’s safe to return to work.” This can be seen in the restaurant industry: Some workers have quit or are reluctant to apply because of COVID-19 concerns, low pay, meager benefits and the stress that comes with a fast-paced, demanding job. Restaurants have been willing to offer signing bonuses and temporary wage increases. One McDonald’s is even paying people $50 just to interview.
Could waiving patents increase the global supply of COVID-19 vaccines?
India and South Africa have introduced a proposal to temporarily suspend patents on COVID-19 vaccines. Backers of the plan say it would increase the supply of vaccines around the world by allowing more countries to produce them. Skeptics say it’s not that simple. There’s now enough supply in the U.S that any adult who wants a shot should be able to get one soon. That reality is years away for most other countries. More than 100 countries have backed the proposal to temporarily waive COVID-19 vaccine patents. The U.S isn’t one of them, but the White House has said it’s considering the idea.
Can businesses deny you entry if you don’t have a vaccine passport?
As more Americans get vaccinated against COVID-19 and the economy continues reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.
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