Sales rose 5.3% after three consecutive months of declining sales during the 2020 holiday shopping season
By Harriet Torry – The Wall Street Journal.
U.S. shoppers boosted spending by 5.3% in January, the first monthly increase in four months, buoyed by stimulus payments that many households received in the most recent virus-relief package.
Consumers spent more in a number of areas last month, with furniture and electronics posting double-digit month-over-month gains, the Commerce Department said on Wednesday in its latest retail sales report. Receipts at bars and restaurants also increased 6.9% from December.
January’s sales gain was significantly higher than economists expected. Forecasters surveyed by The Wall Street Journal estimated that retail sales—a measure of spending at stores, vehicle dealerships, restaurants and online—increased a seasonally adjusted 1.2% in January from a month earlier.
Robert Rosener, senior U.S. economist at Morgan Stanley, said the report “will be the start of exiting the worst of the softer data winter we’ve seen,” with the $600-a-recipient stimulus checks distributed in early January the main factor driving an uptick in spending.
Allen Merry said he used his recent stimulus check to buy a used acoustic guitar from a local musical instrument shop.
The 55-year-old librarian from Philadelphia has played the guitar in his free time for years, but has had more time to dabble in recent months thanks to remote work cutting down his commute.
His first stimulus check last year went straight into his savings account, Mr. Merry said. A frequent concertgoer in normal times, he hasn’t spent much over the past year due to all the time at home, so he is grateful to be able to spend his second stimulus payment on “something fun,” he said. “Most people have to use it to just keep themselves going, so I definitely feel fortunate.”
Grocery, big-box and electronic stores likely benefited in January as households stocked up on essential goods with their stimulus payments. Consumers “continue to spend on things that improve their life at home, this nesting dynamic,” said Sarah Wyeth, a retail analyst at S&P Global Ratings.
Retailers like Walmart Inc., Target Corp. and Costco Wholesale Corp. “have so many categories, and consumers are still consolidating shopping trips,” she said.
Still, Ms. Wyeth cautioned that labor market weakness, a recent decline in consumer sentiment and the slow rollout of Covid-19 vaccines put question marks over the strength of retail spending in January.
Problems with the vaccine distribution process, along with the arrival of new coronavirus variants, have dashed some business leaders’ hopes for getting back to normal quickly. Coca-Cola Co. said last week that the pandemic has been worse this winter than the beverage giant expected, and the first half of the year would be challenging.
Still, Hasbro Inc. and Mattel Inc. said last week they enjoyed a boost during the Covid-19 pandemic as lockdowns spurred parents to spend on toys from board games to Barbie dolls for their children.
Jared Sullivan usually takes ski vacations at this time of year, but he skipped trips to Aspen and Utah with friends both to save money and because of the pandemic. The 38-year old has also reined in spending on nonessential items like new outdoor gear and clothes.
“This is the first time I’ve not gone on a ski trip out West in 10 years,” said Mr. Sullivan, who was laid off in April from his job in Chicago as an economist in the commercial-real-estate sector. He has since found a new job and is working remotely from Bethlehem, N.H. “I haven’t traveled hardly at all because of Covid,” he said.
Featured article licensed from the Wall Street Journal.