The numbers: Sales at U.S. retailers leaped almost 10% in March thanks to $1,400 stimulus checks for consumers from the federal government and an accelerating economy that’s likely to stay in the fast lane through the spring and summer.
Receipts climbed 9.8% last month, the government said Thursday. Economists polled by Dow Jones and The Wall Street Journal had forecast a 6.1% increase.
The sales gain was the second largest on record, exceeded only by a 18% spike last May when a U.S. lockdown was lifted.
The snapback in sales was widely expected after Washington approved a massive $1.9 trillion stimulus in early March.
Sales won’t keep up the same pace in the months ahead after the stimulus fades, but a rebounding U.S. economy is expected to help retailers stay plenty busy.
What happened: Sales revved up 15% at car dealers even as automakers struggled to procure enough computer chips to maintain production. Auto sales account for about 20% of all retail sales.
Sales at gas stations also surged nearly 11%, reflecting rising oil prices and more Americans taking to the road as government coronavirus restrictions are lifted. If autos and gas are set aside, retail sales leaped 8.2%.
Almost every major retail group shared in the benefits of the federal stimulus.
Receipts leaped 13.4% for bars and restaurants, 18% for clothing stores, 23.5% for purveyers of sporting goods and other recreational items and 10.5% for big-box electronics outlets such as Best Buy /zigman2/quotes/205918291/composite BBY -1.15% .
Grocery stores saw the smallest increase in sales. Receipts rose just 0.5% as more Americans splurged on takeout or went to a restaurant
The sales decline in February, meanwhile, was revised down to 2.7% from an initial 3%.
Sales sank in February after a previous round of government stimulus checks was largely spent in January. Retail sales shot up 7.7% in the first month of the new year.
Big picture: The economy is growing rapidly again owing to mass vaccinations of Americans, relaxed government restrictions on business and another major dose of federal stimulus.
As long as coronavirus cases don’t spike again, the U.S. is likely to expand at a quickened pace through the rest of the year.
Consumer spending accounts for 70% of U.S. economic activity and retail sales is one-third of that figure.
What they are saying? “This data is another indication of the scale of the dramatic acceleration that is underway in the U.S. economy,” said economist Katherine Judge of CIBC Economics.
“All in all, a very strong first half of the year for growth looks to be in the bag,” said chief economist Joshua Shapiro of MFR Inc. “Then, as vaccination rates continue to rise and herd immunity begins to take control, the stage ought to be set for a more sustainable, normal environment later in the year and into 2022.”
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.29% and S&P 500 /zigman2/quotes/210599714/realtime SPX +0.07% were set to open higher in Thursday trade, helped by strong corporate earnings.