© Reuters. FILE PHOTO: Outbreak of coronavirus (COVID-19) in New York City
By Lucia Mutikani
WASHINGTON (Reuters) – US retail sales rebounded sharply in March as Americans received more pandemic relief checks from the government and boosted vaccinations that allowed for broader economic re-participation , bolstered expectations for strong growth in the first quarter.
The Commerce Department said Thursday, retail sales rose 9.8% last month. Data for February was adjusted higher to show sales fell 2.7% instead of 3.0% reported earlier. Economists polled by Reuters had forecast a 5.9% increase in retail sales in March.
More eligible households received an additional $ 1,400 check, part of the White House’s $ 1.9 trillion bailout package passed in early March. The big financial stimulus also expands the $ 300 weekly government-sponsored unemployment allowance through September 6.
At the same time, warming temperatures and public health are rapidly improving, allowing more restaurants to offer food and drink services.
Excluding automobiles, petroleum, construction materials and food and beverage services, retail sales rose 6.9% last month after a 3.4% adjustment in February. These so-called core retail sales correspond most closely to the consumer spending component of gross domestic product. Before that, they were estimated to have dropped 3.5% in February.
Increasing domestic demand was highlighted by the Federal Reserve’s Beige Book on Wednesday, which describes economic activity as “accelerating to a moderate pace from late February to early April. “, and also note that” consumer spending
be strengthened. “
Estimated growth in the first quarter to be the highest at 9.8% annually. The economy grew at a rate of 4.3% in the fourth quarter. Growth is expected to hit 7.0% this year, the fastest since 1984. It will follow the 3.5% drop last year, the worst performance in 74 years.
Although a separate report from the Labor Department on Thursday showed that the number of initial jobless claims still increased last week, that may not be a true reflection of the job market situation.
The original state total of 576,000 was seasonally adjusted for the week ending April 10 compared with 769,000 the previous week. Economists polled by Reuters had forecast 700,000 applications in the latest week.
Part of the increase in claims is due to fraud. Strengthening unemployment benefit programs, including weekly benefits, may also encourage some people to apply for aid and others not to look for work.
According to Michael Feroli, US chief economist at JPMorgan (NYSE :), an analysis of the Labor Department’s first payment data, released monthly and with significant latency, applicants are full Ambitious ambitions are driving unemployment claims.
“Historically, about 45% of initial claims resulted in the first benefit payment,” says Feroli.
“Over the past few months, less than 25% of the initial claim generates the first benefit payment. One possible reason is that the weekly $ 300 bonus payment is encouraging more people to apply, part The reward for the success was significantly greater than before the pandemic. ”
In fact, the Fed’s Beige Book also notes that “hiring remains a common challenge, especially for hourly or low-wage workers, limiting job growth in some schools. well suited.”
Although claims have fallen from a record 6,149 million in early April 2020, they are still much higher than pre-pandemic levels. In a healthy job market, claims range from 200,000 to 250,000.
The government reported this month that the employers hired 916,000 workers in March, the most in seven months.
However, employment remains at 8.4 million jobs below the peak in February 2020.