Some Economists Project ‘Spectacular’ U.S. March Retail Report

U.S. retail sales probably swelled in March thanks to faster hiring, the distribution of federal stimulus checks, a steady pace of Covid-19 vaccinations and fewer restrictions on stores across the country.

Thursday’s report from the Commerce Department will show retail receipts surged by 5.8% in March after a 3% decline in February, according to the median estimate in a Bloomberg survey of economists. Several forecasters project at least a 10% gain, which would be the largest since May -- when the economy began emerging from initial pandemic lockdowns.

“I really think it’s going to be a pretty spectacular report,” Michelle Meyer, head of U.S. economics at Bank of America Corp., who estimates a 11.5% gain. “The question will be what comes next, we can’t repeat these gains, we won’t have stimulus checks every month.”

Some Economists Project ‘Spectacular’ U.S. March Retail Report

Personal incomes were boosted during the month by the distribution of $1,400 stimulus checks from the latest federal pandemic aid bill, signed by President Joe Biden on March 11. Further, the labor market added more than 900,000 jobs last month.

“Stimulus was pumped into the economy in March and consumers have responded to that by increasing spending,” Meyer said. “And more people were put to work in March and are more comfortable with their job security. It’s a very powerful combination.”

In addition to rising incomes, “rapid vaccination and gradual reopenings across the country should drive sales that have been particularly depressed due to the pandemic, including restaurant spending and apparel,” James Sweeney, chief economist at Credit Suisse Group AG, said in a note.

The data represent a sharp snapback from February, when retail activity was hindered by sub-freezing temperatures and winter storms that overwhelmed power grids in Texas and the Great Plains. Warmer temperatures in March allowed for more outdoor activities, likely benefiting restaurants and service businesses.

What Bloomberg Economics Says...

“A sharp unwind in retail sales from the inclement weather-driven drop in February was augmented by the distribution of $1,400 stimulus checks and a broader reopening of the economy, reflected in the near-1 million payrolls gain in the March jobs report.”

-- Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby, Eliza Winger, economists

For the full note, click here

Alternative data also point to firmer retail sales. Compared with the pre-pandemic trend, Chase credit card spending was down just 5% in March, compared with down 10% in February, according to data from economists at JPMorgan Chase & Co.

Meanwhile, a measure of same-store sales from Johnson Redbook was up 9.8% from the prior year during the last week in March compared with 4.6% at the end of the previous month. Restaurant reservations measured by OpenTable are also improving.

Stimulus, Spring Breaks

Merchants ranging from restaurants to apparel stores have also reported better results in March. Costco Wholesale Corp. saw U.S. comparable-store sales excluding gas rise 11.3%, while customer traffic improved 3% from the same month last year, a time when shoppers began flooding to Costco locations to stock up on home essentials when the pandemic began.

Dave & Buster’s Entertainment Inc., whose arcade-studded restaurants have been hit hard by the pandemic, said demand has been improving after the final “tough months” of 2020.

Brian Jenkins, the company’s chief executive officer, attributed a March improvement in demand to more economic stimulus, earlier spring breaks for students and better Covid-19 trends.

“We’re seeing a little bit of pent-up demand,” Jenkins said on a March 31 earnings call. March is going to be “better than we saw in the month of February.”

In the coming months, retail sales should continue to be positive, but it will be difficult to sustain growth in the double-digits, Bank of America’s Meyer said.

©2021 Bloomberg L.P.

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