April Retail Sales Move Sideways After Huge Stimulus Surge in March

Retail sales.
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U.S. retail sales in April did not keep up the pace of their earlier expansion as the boost from direct stimulus deposits faded.

Retail and food services sales were unchanged from the prior month, falling short of the one percent expansion forecast by economists. But that shortfall was offset by a strong upward revision for the March figure, when retail sales jumped 10.7 percent, up from the previously reported 9.7 percent increase, according to data released by the Commerce Department Friday.

In other words, much of the gain expected in April actually had already occured.  And although retail sales did not rise in April, holding on to the stimulus-pumped March gain is still a strong showing for the retail sector.

In fact, a long-term chart of retail sales indicates that three rounds of relief and stimulus spending that began last year have pushed sales not only past their post-2008 trend but above the pre-financial crisis trend.

 

And retail sales may remain strong for the rest of the year. Households built up at least $2.3 trillion in excess savings during the pandemic, due to stimulus payments, enhanced jobless aid, suspended student loans, and lockdown repressed consumption. As the economy reopens and unemployment rates fall, that excess savings will likely be spent down, providing a further boost to the economy.

Core retail sales—which exclude automobiles, gasoline, building materials, and food services—fell 1.5 percent in April. But the prior month was revised to show a 7.6 percent gain, up from the previous estimate of 6.9 percent.  Core retail sales are a proxy for the consumer spending component of gross domestic product. Consumer spending accounts for more than two-thirds of U.S. economic activity.

Sales at car dealerships were up 3.1 percent in the month. Sales at electronics and appliance stores rose 1.2 percent. Grocery store sales were up 0.6 percent and sales at health and personal care stores were up 1 percent.

Sales fell at department stores, gas stations, sporting goods stores, and home improvement and garden stores. All those categories saw huge gains in March, so the April gains suggest some of those sales were pulled forward. Sales at clothing stores, for example, fell 5.1 percent after rising 22.7 percent in March from February.

Bar and restaurant sales rose 3 percent in April following a 13.5 percent gain in March.

Online sales declined 0.6 percent after March’s 4.7 percent gain.

The annual gains now reflect an economy that was locked down a year ago, so the numbers are all at record highs. Overall retail sales are up 51.2 percent compared with a year ago. Car sales are up 111.6 percent. Furniture sales are up 196.4 percent. Clothing store sales are up 726.8 percent. Sporting good sales are up 155 percent.

The exception to this is grocery store sales, which are down 0.2 percent compared with the run-on-everything (especially toilet paper) days of April 2020.

 

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