US Retail Sales Unchanged in April After Initial Surge

Milja Image
ByMilja
May 21,2021

After rising dramatically in March, US retail sales stalled in April, despite expectations of a stimulus-check-related increase. However, as the economy reopens in the following months, an upward trend should reemerge.

The US Department of Commerce said on May 14 that the unchanged retail numbers in April were still below predictions made by Reuters and Dow Jones. The new agency and stock market index forecast a jump of 1.0% and 0.8% in the sector, respectively.

One of the reasons for this optimism was the $1,400 checks US households received in March as part of the $1.9 trillion COVID-19 pandemic rescue package. What’s more, pandemic household savings amount to an estimated $2.3 trillion, which should have helped lay the groundwork for spending in 2021. In March, the surge of consumer spending influenced the first quarter’s base for expected high growth in the second quarter.

However, retail sales - excluding gasoline, cars, construction material, and food services - have dropped by 1.5% in April, after a 7.6% rise in March. Also known as “core retail sales,” these transactions represent the biggest component of consumer spending. This growth stop and slight drop indicate that households directed the government funds they received primarily to day-to-day needs and outstanding expenses, instead of regular shopping.

The current shortage of workers slowed hiring in April, while low sales further hampered the economic recovery. Even though more than 37% of US citizens are fully vaccinated against COVID-19, the fear of the pandemic, combined with underwhelming wage offers from employers, is keeping workers at home.

Here at SmallBizGenius.net, we remain optimistic that economic recovery is on the horizon. However, without proper support during recovery, such as business-friendly banking services, the question remains how the retail sector will manage this latest hitch in the recovery effort.

More News

Florida and New York both announced plans to lift their remaining COVID-19 restrictions following the country- and state-wide drop in new cases and deaths. After that, New Jersey and Connecticut will start lifting the measures they currently have in place as well. As CNBC reported, major retail stocks spiked on Monday following these announcements. Non-essential businesses that spent most of last year closed to curb the spread of the pandemic are now likely to get back to growing. The leisure, hospitality, and clothing industries are all amidst a re-hiring effort, and this reopening push will have a significant impact on the stock market. Retail sales surged by 9.8% in March, as customers took advantage of their $1,400 stimulus checks. The clothing industry has seen some of the most significant gains, with consumers feverishly shopping for new attire to keep up with the numerous new trends popping up over the last year. Witnessing this renewed economic power in the consumer base, more and more investors are considering buying into the retail economy. As a result, apparel retailer shares have all witnessed significant upticks: Dillard’s, the department store chain, stocks gained 9.7% in value, Macy’s share price rose by 8%, Nordstrom and Urban Outfitters hit 6%, while American Eagle and Kohl’s closed up with a 5% jump. Gap share prices settled at $35.47 after a continuous rise. According to the data gathered by NPD Group, 47.5% of US consumers are planning to purchase clothing in the next 60 to 90 days. Eventually, the number of small businesses may rise as well, once the economy recuperates enough for such opportunities, which will likely be followed by an increase in bank offers to create new checking accounts. Hopefully, we will soon see a much tighter labor market and steady growth of hourly wages. On the downside, this might result in higher inflation rates. Whether this retail windfall will go one way or the other is something we’ll see before long.
By Julija A. · May 12,2021
Visitors are coming back to indoor malls, hopefully signalling that the worst days of the pandemic are behind us. A sample of 50 major malls across the US registered 86% more visits in March 2021 compared to the same month last year. Even though these numbers are still 24% lower than those from March 2019, mall owners are optimistic after this recent improvement.After the past year, people obviously could not wait to go out again. This return to the mall is another step in that direction, illustrating the customers’ desire to enjoy social activities, dine, and go back home with their bags full. The government stimulus checks have helped mall shops stay afloat, so now they are ready to welcome vaccinated shoppers back to their favorite form of recreation.This is yet another sign that the vaccine rollout has made an enormous impact on the overall economy in the US. Even in February, Valentines' Day resulted in a big jump in sales. At this point, most restaurant owners and retailers expect this upward trend to continue over the summer.However, the improvements are not equally distributed across retail sectors. Shoppers are currently more focused on casual clothing and accessories, less so on formal and business attire. Even though some workers have returned to the office, most people are still working from home, reducing the need for business-appropriate clothing.Due to this uptick in shopping traffic, rent collection on mall space is also recuperating. Ami Ziff, director for national retail at real-estate firm Time Equities, is the owner of eight enclosed shopping malls and several outdoor ones. He said, “Our collection rates are above 90%, that's really good news.”The first quarter of the year is usually crucial for the shopping-space owners, and while some retailers end up filing for bankruptcy protection, there are small businesses that have insured their assets for cases like this, allowing them to make rent.
By Nikolina Cveticanin · February 28,2022
Retail sales surged 9.8% in March as a fresh batch of stimulus checks fuels consumer spending. Other factors contributing to the economic recovery include the re-opening of businesses, better jobless claims, vaccination efforts, and warmer weather. According to the Commerce Department’s report, the latest gains are being led by sporting goods, clothing, bars, and restaurants. The 9.8% spike even exceeded estimates by Dow Jones of a 6.1% gain. The $1,400 stimulus checks started making their way to American households in mid-March. As part of the Covid-19 recovery program, the federal government passed the $1.9 trillion American Rescue Plan Act, with $1,400 stimulus checks driving the rise in spending following extensive closures and lockdowns. People are once again thinking about getting order checks. The software firm Cortera reported that spending was up 14.5% in March compared to last year.Mark Zandi, a chief economist from Moody Analytics, had previously said that spending increased across most retail segments, with May expected to be another record-high month. Bank of America also showed a credit card spending spike in March with a 67% increase over a seven-day period that ended on April 3. Economic tides have improved with the consumer confidence index increasing to 109.7 in March, the most substantial monthly gain since April 2003. Consumers managed to increase spending and savings, with rates expected to be at least 20% in March. Some might already be thinking about opening a small business as retail sales soar by partnering with the best banks. Meanwhile, the Labor Department reported the lowest level of new jobless claims since the start of the Covid-19 pandemic, with 576,000 people filing for unemployment insurance. This appears to have reassured consumers, who in turn boosted sales. The brighter outlook may boost other sectors and drive up the number of people getting a business checking account. 
By Julija A. · April 16,2021

Leave your comment

Your email address will not be published.


There are no comments yet