E Economics

US Retail Sales For March Rose Far More Than Expected

15 April, 2021

As I previewed, US retail sales rebounded sharply in March and beat the Bloomberg consensus (+5.3%e MoM). The value of overall sales increased 9.8% from the prior month, rising by the most in 10 months. Excluding autos, sales rose 8.4%, also far ahead of the 5.0% estimate. Looking at the details, Bloomberg highlighted that receipts at restaurants rose 13.4%, while sales at apparel retailers jumped 18.3% — both the strongest advances since June of last year. As I noted, US retail sales were mainly supported by the new stimulus checks, improving labor market, an easing of Covid-19 restrictions and favorable weather conditions.

US retail sales March

It should boost 1Q21 GDP after 4Q20 GDP was revised upward to +4.3% QoQ annualized (up from the previous reading of +4.1%). In this context, if real 1Q21 GDP rises 10.2% on a QoQ annualized basis, it should exceed pre-pandemic level (4Q19).

US Real GDP Q1

Meanwhile, the level of overall sales should remain robust in the coming months with households on track to spend a part of savings accumulated during the pandemic. The large amount of excess savings accumulated since March 2020 (more than $1.750 trillion at the end of February 2021) could partly flood the economy from 2Q21 amid improving confidence linked to the labour market and easing restrictions that would unlock spending related to travel, leisure and hospitality sectors. As a reminder, several states including California, Illinois, Massachusetts, and New York (~80 million people) — which had some of the more stringent lockdowns — are poised to reopen.

Excess Savings February 2021

All in all, today’s figures reinforce my view that US growth should exceed expectations in 2021 and will easily top the 6% mark.