Retail Sales Surged to a Record High in March
Retail sales and food-services spending surged 9.8 percent in March, the second sharp jump in the last three months. The strong performance pushes total retail spending to a new record high and well above the most recent nine-year trend (see first chart). From a year ago, retail sales are up 27.7 percent. Averaging the first three months, total retail sales are up 14.3 percent versus the first three months of 2020.
Core retail sales, which exclude motor vehicle dealers and gasoline retailers, posted an 8.2 percent jump for the month, putting that measure at a new record high as well. Core retail sales are up 17.9 percent from a year ago and are also well above the nine-year trend (see first chart). Averaging the first three months, core retail sales are up 11.3 percent from the same period a year ago.
Comparing the first three months to the fourth quarter, total retail sales and food services spending is up 34.7 percent at an annualized rate while core retail sales are up at a 29.5 percent pace. Those results suggest a very strong reading for first quarter gross domestic product.
The gains in March were broad-based across the categories shown in the report. As in January, all thirteen major categories reported a gain in sales (see second chart). The gains were led by a 23.5 percent jump in sporting goods, hobby, musical instruments and book stores sales, followed by an 18.3 percent surge in clothing and accessories store sales, and a 15.1 percent gain in motor vehicles and parts sales (see second chart).
The strong March result provided a strong boost for the overall recovery among the individual categories, as just one of the 13 categories still had sales below their pre-lockdown levels. Restaurants were 5 percent below February 2020 while every other category now had sales above pre-pandemic levels (see third chart).
Overall, retail sales posted a strong gain in March, the second surge in spending in the last three months. The first three months average to a very robust start to the year and suggest that growth in first quarter gross domestic product is likely to be quite vigorous. Combined with the ongoing distribution of vaccines and easing of government restrictions on consumers and businesses, the outlook for the economy is improving significantly. The positive momentum needs to be sustained, but recent data have been clearly favorable.
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
