Stimulus money sent at the end of 2020 appeared to translate into spending, rather than saving, reversing three consecutive months of retail sale declines.
Retail sales surged 5.3 percent in January, far higher than analysts and economists expected, providing a needed jolt to an economy that showed signs of weakening at the end of last year. The large jump in sales, reflected in data released Wednesday by the Commerce Department, was most likely fueled by the latest round of stimulus checks that were mailed out at the end of last year. The $600 checks, in addition to some easing in virus outbreaks and the increased distribution of vaccines, helped bring customers back into stores and restaurants last month. Ian Shepherdson, chief economist at Pantheon Macroeconomics, called the January increase “remarkable” and predicted that spending would continue to grow in the coming months as the country began making progress against the coronavirus and consumer sentiment continued to improve. “The overall strength in the numbers cannot be overstated, as every retail category was up over December,” Mickey Chadha, a retail analyst at Moody’s Investors Service, said in an email. Businesses from auto dealers to department stores, which have struggled mightily to attract customers during the pandemic, showed strong sales growth.
