Retail sales are expected to rise in March as consumers spend stimulus checks

Retail sales are expected to be strong in March, with some economists believing that stimulus tests have quickly penetrated the economy, contributing to an even greater profit of 10% or more.

The March sales data, released Thursday at 8:30 a.m. ET, could be the first in a series of powerful consumer spending reports as vaccinations increase and economic reopening continues. The $ 1,400 fiscal stimulus checks sent to individuals in mid-March appear to have spurred spending in an environment of pent-up demand.

“We expect the retail sales report to be excellent in March, with headline and core retail sales rising more than 11% monthly,” Bank of America economists wrote. “Stimulus, reopening and better weather was a powerful cocktail for consumer spending.”

A burst of consumer spending of more than a month is expected to start an economy that is expected to revive this year. The strongest growth is expected in the current quarter, which according to some economists could lead to gross domestic product growth of more than 10%. This can be compared to the second quarter of last year when the economic downturn led to a collapse of the economy, with GDP falling by 33.3%.

Economists expect retail sales to rise by a consensus by 6.1%, or 5.3% excluding cars, in March, according to Dow Jones. This can be compared to a 3% decline in sales in February, when severe winter weather caused a freezing point in the south with major power outages in Texas.

But some economists believe that spending data shows that sales may be even stronger. “It’s going up by more than 10%. Unlike in May last year, it’s going to be a record. There’s a lot of vehicle sales, higher petrol prices and then everything,” said Mark Zandi, chief economist at Moody’s Analytics. “The restaurants are coming back. Clothing stores are much higher. This is the reopening of retail and that will be reflected in the number.”

Zandi said it expects retail sales to rise by 10.3% in February and to be 28% higher than the previous year.

“It’s reopening. It’s stimulus money. It’s a refund of the weather, which sums it all up as a gangbuster number,” Zandi said. “I think we are going to see very strong numbers going forward. We are on track.”

Zandi said the business-to-business spending data supports his view. According to the software industry Cortera, recently acquired by Moody’s, the spending of all businesses increased by 14.5% in March compared to last year, while the spending by retailers increased by 9%.

Zandi said retailers and other businesses, such as airlines, benefiting from a reopening of the economy fared better in March than businesses doing business at home for the first time since the start of the pandemic.

“Expenditure has increased in most retail segments, with restaurants, furniture stores, clothing stores, gas stations and sports shops carrying the levy,” according to Cortera. “The decline in spending was seen in food and beverage stores as consumption shifted to restaurants and pubs.”

Cortera, which tracks about $ 1.7 billion in business spending, found that spending was 14.6% lower than last year for food and beverage stores, but food and beverage services, such as pubs and restaurants, rose to just under 20 % more than last year.

Bank of America credit card spending also rose in late March. According to BofA economists, there was a 67% increase in card spending during the seven-day period ended on 3 April. Spending in that period was also 20% higher than in the same period of 2019.

“The spirit of animals rose sharply as the confidence level in the Conference Board rose to 109.7 in March, the largest one-month increase since April 2003,” Bank of America economists noted. “Consumers can increase spending while still increasing savings – we think the savings rate will be around 20% in March – if not higher.”

U.S. economist Kevin Cummins said he expects a 10% increase in March, conceding that it is at the highest point of forecasts. He expects sales to boost the $ 1,400 stimulus checks sent to individuals, which began reaching bank accounts around March 17.

“The back of the month must be very strong,” he said. “If you look at car sales, it was the highest level in four years. It looks like restaurants are getting crowded with seats outside.”

The scope of the forecasts is extraordinarily large, and economists expect them to win 4 to 11.5 percent. This means that the market reaction can be volatile.

“Normally, prepandemically, the range can be 1 percentage point [apart], maybe 2, “says Michael Schumacher, director of tariffs at Wells Fargo.

Bank of America economists said the retail sales data could start a debate again over whether business will pick up spending to boost the economy after spending consumers.

“With data confirming consumer strength, the debate is now moving to the next stage of recovery,” said Bank of America economists. “Will it just be a sugar high with a painful hangover, or will it start a positive feedback loop leading to a sustainable recovery? We expect the latter, but it will depend on a positive response from Corporate America.”