Easing coronavirus lockdowns tied to the rapid rollout of Covid-19 vaccinations in the US has helped spark a sharp increase in American consumer spending and the lowest new jobless claims since the start of the pandemic.US retail sales in March rose by the most in 10 months while the number of Americans filing for new unemployment benefits fell by 193,000 to 576,000 in the week ending April 10, according to data published on Thursday. That beat economists’ expectations for 700,000 new claims.
Retail sales grew a seasonally adjusted 9.8 percent in March compared with the previous month, the US Census Bureau reported, stronger than the 5-9 percent increase that economists expected. That spending was bolstered by the arrival of a fresh round of federal stimulus cash.
Sales had been dragged down 2.7 per cent in February, knocked by a severe bout of winter weather across the US and the fading impact of payments sent to Americans in an earlier round of stimulus.
New stimulus cheques began flowing to Americans around the middle of March after President Joe Biden signed a $1.9tn spending plan that included payments of up to $1,400 per person and extended federal unemployment aid.
The jump in retail sales last month was the second-biggest rise on record, behind the 18.3 percent increase in May 2020 as strict stayat-home orders were eased in many parts of the US.
“With consumers still sitting on a pile of accumulated savings combined with the expected reopening of the service economy this summer, our forecast looks for a consumer spending boom this year that will rival any in living memory for most Americans,” said Tim Quinlan, senior economist at Wells Fargo.
The retail sales bump will boost real consumption for the first quarter, “which means GDP will almost certainly print north of 10 percent”, said Aneta Markowska, an economist at Jefferies. “It also creates very strong momentum” for the second quarter, Markowska said, with another increase of 10 percent or more.