The U.S. retail sector has seen a significant rise in sales in January, which is the highest since last seven months, surged in January by the most in seven months, beating all estimates and suggesting fresh stimulus checks helped spark a reboundin household demand after a weak fourth quarter.
According to the Commerce Department figures, the value of overall sales has increased 5.3% compared to last month after a decline of 1% in December. It was the first monthly gain after September, and all major categories showed significant growth. Due to COVID-19 cases going down and the vaccination on a roll, people are back to shop for physical shopping. Restrictions have also eased out, allowing them to shop and even dine out. Also, the $600 stimulus payments helped drive spending in the month across a variety of categories. There is also a proposal of a $1.9 trillion stimulus plan by President Joe Biden, which many say is too big.
The reports also suggest that when fiscal aid arrives on household balance sheets, it does get turned around fairly quickly and materializes in economic activity. There is also another stimulus package scheduled for March, which would help stabilize the economy. "We should see a pretty rapid acceleration in demand and household spending as we move into the second quarter, which could be continued if vaccinations continue apace, and mobility gradually recovers over time," said Michael Gapen, chief U.S. economist at Barclays Plc. U.S. stock futures edged lower after the report, as Treasury yields hovered at their highest level in a year.