There was some cheer on the economic front, as retail sales went up for the first time in the past 10 months. As more Americans received their Economic Impact Relief checks, people had more money in their hands. The increase in the number of vaccinations against COVID-19 also allowed people to socially engage more. This has firmed expectations of robust first-quarter growth.
Another bright note on the economic front was that unemployment benefits were at their lowest level after March last year when the lockdown was imposed to contain the initial pandemic wave.
Retail Sales Lighten The Economic Gloom
Though the production increase was modest at factories, there has been a robust domestic demand that has given a boost to manufacturing. The global scarcity of semiconductor chips has been affecting the automobile industry. There have also been reports of inflation heating up. The positive news will in all probability not affect the stance of the Federal Reserve’s benevolent monetary policy.
Federal officials had not expected the boom in the retail sales to sustain, though it has held its own so far. They have no plans of a change in policy till the employment level stabilizes and there is a sufficient increase in price levels. The next two months should bear this out.
Retail sales were up at 9.8% in March. It was the greatest increase after May last year. The Commerce Dept. has also said that revised data for February showed that sales had dropped 2.7% and not 3% as previously assumed. The surge in March will push the sales level 17.1% over the pre-pandemic levels. It will have risen to a record high.
The prediction for March had been a modest 5.9%. The year-on-year sales have hit a record high of 27.7%.
Sales were also high in the hospitality industry at 13.4%, clothing at 18.3%, electronics, and other appliances at 10.5%. Building material rebounded to 12.1% and online retail saw an increase of 6%.
The S&P 500 and the Dow Jones were at record highs. The USD has also strengthened against other currencies.
Morgan Stanley has raised growth estimates to an annualized rate of 9.7%. The 4th quarter economic growth stood at 4.3%. The manufacturers were also positive about retail sales prospects over the next 6 months. 916,000 jobs were created in this period. But it is still below the peak in February last by 8.4M.