Business

Retail sales burst higher in January as consumers use stimulus checks to spend heavily


Consumers flocked to spend their stimulus checks in January, sending retail sales for the month up 5.3% in a blockbuster start to 2021, according to a government report Wednesday.

Economists surveyed by Dow Jones were expecting a rise of just 1.2%.

Excluding autos, sales rose 5.9%, also far ahead of the 1% estimate in a display of unexpected strength from the consumer.

A month after Congress approved a $900 billion additional stimulus package on top of the $2.2 trillion approved earlier in 2020 to counteract the Covid-19 impact, shoppers were armed with $600 checks they used to buy a variety of goods.

The jump in consumer spending came at a time when expectations for growth in the early part of 2021 were muted as the economy continued to shake off the pandemic-induced slowdown.

Spending gains were broad-based, with every major category showing increases.

Electronics and appliances saw the biggest increase, up 14.7% for the month, while furniture and home furnishing stores were up 12% and online spending at nonstore retailers jumped 11%. Even food and drinking places, which suffered the worst during the pandemic, saw a 6.9% rise.

From a year ago, bars and restaurants continued to see damage as sales there are down 16.6%. Clothing and accessories are also off 11.1% while electronics and appliances saw a 3.5% decline.

Online shopping is the biggest gainer since January 2020, up 28.7%, while building materials rose 19% and sporting goods increased 22.5%,

While most economists see the year off to a slow start, they expect the pace to pick up later in the year as vaccination efforts spread and the Covid-19 albatross fades.

One of the main concerns for the recovery has become inflation, and a separate data point showed those pressures continuing to build.

The producer price index, which measures the prices that domestic producers receive for their goods, surged 1.3%, the largest monthly gain since the measure began in December 2009.



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