The Week in Review: April 19, 2021
Stimulus Checks Supersize Retail Sales
Subject to income limits, $1,400 checks per person started to roll into bank accounts in March, fueling the second largest monthly increase in retail sales since 1992 (when the current data series was first reported, U.S. Census).
Moreover, restrictions on various businesses are easing, aiding the flow of cash to retailers.
Retail sales rose 9.8% last month to a record high. Automotive dealers were big beneficiaries, rising a sharp 15.4%. While we saw gains across the board, it’s important to point out that restaurants and bars jumped 13.4% amid fewer restrictions and a growing confidence provided by the vaccines.
The graphic also highlights the distortions caused by the initial shutdown, the uneven reopenings last year, and the impact of government-provided cash.
But not all the money is being spent. Some of the cash is being saved. Bloomberg News reported last week that the large banks are seeing big increases in deposits.
“What happened is, the consumer has so much money, they’re paying down their credit card loans, which is good,” J.P. Morgan (JPM $153) CEO Jamie Dimon said.
“Their balance sheet is in excellent, outstanding shape–coiled, ready to go, and they’re starting to spend money. Consumers have $2 trillion more in cash in their checking accounts than they had before COVID.”
Where are we headed from here? Economic forecasting is an imperfect science since many variables go into forecasting models and future events are unknown. But the consensus outlook is favorable.
“Evidence is mounting that the U.S. economy is kicking into overdrive. The surge in March vehicle sales is a clear tell,” Mark Zandi, Chief Economist of Moody’s Analytics said last week.
Investors, which sniffed out the robust economic recovery early last year, continue to provide a vote of confidence for the economy.
If you have any questions or concerns, please don’t hesitate to let me know.
Two for the Road
In March, factory activity in the U.S. hit its highest level in 37 years, but it would have been higher had there been enough qualified workers to help production lines. Additionally, Delta Airlines was forced to cancel almost 100 flights over Easter weekend due to a pilot shortage. —Morning Brew, April 7, 2021
Forty-two percent of Americans gained weight while stuck at home during the pandemic. On average, people gained 29 pounds, while Millennials reported the highest average weight gain at 41 pounds. —CBS News, March 23, 2021
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