Retail sales surged 5.3 percent in January as federal stimulus and economic relief measures fueled a sharp rebound in consumer spending, according to data released Wednesday by the Commerce Department.
Spending on retail goods and food services rose last month after a December decrease of 1 percent, thanks in large part to the second round of direct payments and the renewal of expanded unemployment benefits. The January increase came after retail sales fell by 1 percent in December, according to revised figures released Wednesday.
“The January data suggest that the picture is improving,” said Cailin Birch, global economist at The Economist Intelligence Unit, in a Wednesday analysis.
“The stopgap aid bill that was passed by Congress in the final days of 2020, together with the likelihood of a sizeable economic relief package from the Biden administration before end-March, are likely to be feeding into household confidence, supporting spending.”
Electronics and appliance stores, furniture shops and online retailers saw sales increase by more than 10 percent each from December, and department stores posted a whopping 23.5 percent gain last month. Restaurants and bar sales also increased 6.9 percent in January, but remain 16.6 percent below January 2020 levels.
The rebound in retail sales comes as falling coronavirus cases, the rising pace of vaccinations and progress toward another economic aid bill fuel hopes of a strong recovery from the coronavirus recession.
More than 10 million of the more than 20 millions jobs lost to the pandemic have yet to be recovered, and economists argue that the 6.3 percent January unemployment rate obscures millions of Americans who have dropped out of the labor force because of the pandemic.