Consumers flocked in January to spend their stimulus checks and retail sales for the month rose 5.3% in a snap to 2021, according to a government report on Wednesday.
Economists polled by the Dow Jones expected a rise of just 1.2%.
Excluding cars, sales rose 5.9%, well ahead of the 1% estimate, which shows an unexpected power of the consumer.
A month after Congress approved an additional $ 900 billion incentive package over the $ 2.2 billion approved earlier in 2020, buyers were armed with $ 600 checks they used to buy a variety of goods.
The increase in consumer spending took place at a time when expectations for growth in the early part of 2021 were dampened as the economy continued to shake off the slowdown from the pandemic.
The spending gains were broadly based, and each major category rose.
Electronics and appliances increased the most, by 14.7% for the month, while furniture and household furniture increased by 12% and online spending on retailers increased by 11%. Even eating and drinking places, which suffered the most during the pandemic, had an increase of 6.9%.
While most economists start the year slowly, they expect the rate to increase later in the year as the vaccination effort spreads and the Covid-19 albatross fades.
One of the main concerns for the recovery has been inflation, and a separate data point has shown that the pressure continues.
The producer price index, which measures the prices that local producers receive for their goods, rose by 1.3%, the largest monthly increase since the benchmark began in December 2009.
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