US: March retail sales undoubtedly boosted by direct checks – Wells Fargo

The March retails sales report in the US surprised to the upside with a 9.8% increase. Analysts at Wells Fargo point out March started out with retailers still under pressure from February's deep freeze which put a chill on spending activity; but consumers hit stores in March with a pocketful of money and eager to make up for the lost time.

Key Quotes: 

“The 9.8% increase in overall retail sales during the month is exceeded only by the surge tied to the reopening of the economy in May 2020 after the lockdowns. Said differently, the three largest monthly percentage gains on record for retail sales have occurred in the past 10 months. Don't call it base effects either—the level of retail sales is a stunning 17% higher than it was before the pandemic hit.”

“March sales were undoubtedly boosted by the latest round of economic impact payments (direct checks) designated to households under the American Rescue Plan. By our estimates, nearly 80% of the latest round of direct checks were sent to households by the end of March, but payments did not start going out till the second half of the month. This suggests that if sales are not due for payback in April, we may see some in May.”

“Overall, this report presents upside to our first quarter forecast for PCE to grow at an annualized rate of 7.2%.”