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Livesquawk - US Retail Sales Soar After Latest Round Of Stimulus Cheques
US Retail Sales Soar After Latest Round Of Stimulus Cheques

- USD 1,400 pay-outs spur spending

- Biggest climb since May 2020

 

By Eric Culp, European Editor

LiveSquawk News

@EricCulpLS

 

15 April 2020 | 13:40 GMT

 

 

Retail sales in the world’s biggest economy surged in March following Washington’s most recent government stimulus payments to households, showing once again that the US economy seems to have shifted into a higher gear.

 

The US Commerce Department said March sales jumped 9.8% on the month. The number blew past the market estimate of 5.9% and beat the upwardly revised -2.7% rate in February. Excluding autos, sales rose 8.4% last month to outpace the 5.0% estimate and the upwardly revised reading of -2.5% in February.

 

The spending was broad-based, according to the report.

 

The March data means US consumers have turned in quite the first quarter, with retail sales up more than 7% in January. Americans received government stimulus pay-outs of USD 600 in the first month of the year and USD 1,400 last month.

 

The retail sales report was released at the same time as this week’s initial jobless claims, which were lower than expected. The euro spiked against the greenback on the news, and the yield on the 10-year US treasury sagged below 1.61% and flirted with the 1.60% mark.

 

With US inoculations hitting a record over the weekend and more pandemic restrictions landing on the scrap heap, optimism is beginning to permeate. Sal Guatieri, senior economist at BMO, said: “With hefty rebate payments in wallets and vaccines in arms, American shoppers took advantage of much nicer weather and easing restrictions to unleash pent-up demand for travel, dining and personal-care services, and virtually everything else, while still racking up savings.

 

“Assuming mass immunity is reached this summer, American consumers are well on their way to having the best year since 1946.”

 

But America hasn’t shaken the coronavirus just yet. New case levels pushed to 70,000 a day recently, raising concerns about yet another wave from a wide range of experts and observers, including Fed Chairman Jerome Powell.

 

And low interest rates and government support for consumers cannot go on indefinitely. “US economy overheating,” tweeted Luca Paolini, chief strategist at Pictet Asset Management, “Time to reduce stimulus now or hangover will be unnecessarily painful.”