By Amara Omeokwe 

U.S. shoppers likely boosted retail spending sharply in March as federal-stimulus funds made their way to households, warmer weather set in and the economy reopened more fully from pandemic-related restrictions.

Economists forecast that the Commerce Department will report Thursday that retail sales -- a measure of purchases at stores, at restaurants and online -- increased by 6.1% last month, compared with a 3% drop in February.

"There were a lot of positive forces for consumers in March," said Michelle Meyer, head of U.S. economics at Bank of America. "The reopening progressed throughout March, with more and more states easing restrictions, more and more people becoming vaccinated and feeling comfortable re-engaging in the economy and activities that they did previously."

Economists said retail sales last month also likely moved higher as they came off weakness in February, when sales were damped by severe winter storms. The economists expect robust gains for autos because of strong consumer demand for vehicles and higher gasoline sales as prices at the pump rose last month.

Separate economic readings due Thursday are expected to show an increase in March industrial production and a decrease in the number of workers filing for unemployment benefits. U.S. consumer confidence is at its highest levels since the Covid-19 pandemic began, as signs of momentum in the economic recovery build. U.S. employers, for example, added a seasonally adjusted 916,000 jobs in March as the unemployment rate fell to 6%.

More Americans are also receiving the coronavirus vaccine, while a pause this week in the use of the Johnson & Johnson shot is expected to have a limited impact.

An average of roughly 2.9 million vaccine doses were administered daily across the U.S. in the seven days ended April 9, compared with about two million at the beginning of March, according to data from the Centers for Disease Control and Prevention.

Meanwhile, the federal government has since mid-March disbursed about 159 million stimulus payments of more than $376 billion to households from the latest virus-aid package, the Treasury Department said this week.

While the economy in March still had 8.4 million fewer jobs than just before the pandemic hit, the government aid has boosted consumers' ability to spend, said Richard Moody, chief economist at Regions Financial Corp.

"The story is that there's a lot of financial support in the household sector, even though the level of employment is still so far below where it was prior to the pandemic," Mr. Moody said.

Bank of America data tracking credit- and debit-card spending showed consumers in March sharply increased spending on clothing and furniture and at department stores and restaurants.

Similarly, figures from Earnest Research, a data analytics company that tracks card spending, showed that consumer spending was up 29% in March compared with February and up 24% last month compared with the same period last year.

With increased vaccine circulation and Covid-19 cases retreating from recent peaks at the end of 2020 and into early 2021, many states have eased restrictions on businesses by, for example, reversing bans or loosening limits on indoor dining.

Scott Allen Frost, president of Las Vegas-based Titan Brands Hospitality Group, said the rollout of stimulus funds to households last month coincided with a relaxing of state mandates that allowed restaurants, including the three he oversees, to operate at increased capacity.

"You couldn't have timed March better," Mr. Frost said. "All this pent-up demand came roaring back."

He said sales more than doubled last month compared with March 2019 at Slice of Vegas Pizza Kitchen & Bar and at Titan Brands' two other restaurants, which serve Mexican fare.

Economists broadly expect consumer spending, which accounts for roughly two-thirds of U.S. economic output, will help propel U.S. economic growth this year at its best rate in decades.

Economists surveyed by The Wall Street Journal in April on average forecast U.S. economic output will grow 6.4% in 2021, up from an average forecast of 5.95% expansion in March.

Still, concerns over the pandemic's trajectory remain, with U.S. cases edging up recently and vaccination efforts complicated by reports of rare but severe blood clots among a few recipients of the Johnson & Johnson vaccine. Federal Reserve officials and many economists have said any sustained resurgence in cases could threaten the economic recovery.

Mr. Frost, of Titan Brands Hospitality Group, said he had a cautiously optimistic outlook for the months ahead. He is worried that business could be constrained by factors such as rising prices and the difficulty he has encountered recently trying to hire new workers.

Write to Amara Omeokwe at


(END) Dow Jones Newswires

April 15, 2021 05:44 ET (09:44 GMT)

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