A woman is carrying shopping bags from Nike at the Citadel Outlet Mall, while the global outbreak of coronavirus disease (COVID-19) continues, in Commerce, California, on December 3, 2020.
Lucy Nicholson | Reuters
Aided by government stimulus controls, consumers are expected to increase spending in January and the trend is likely to continue to pick up momentum as most of the economy reopens.
According to Dow Jones, economists expect retail sales to rise 1.2% after a surprise 0.7% in December. The January retail sales report is due to be released at 8:30 am ET on Wednesday, and sales are also expected to increase by 1% if vehicles are excluded.
“I think the main narrative is that things turned around,” said Stephen Stanley, chief economist at Amherst Pierpont. “November and December were pretty negative. As the virus picked up strength, people were getting dazed. In January, you had a little bit of it unknown.”
Stanley said spending was also likely to increase with $ 600 stimulus checks sent to individuals in early January as part of Covid’s latest relief bill, passed by Congress in late December. He expects sales to increase by 0.8%, but profits could be even higher in the coming months.
“The $ 900 billion in tax aid has entered the economy and it’s noticeable,” said Mark Zandi, chief economist at Moody’s Analytics. “It’s very strong. It had been mainly dedicated to work-related retailing from home. Home appliance and home appliance stores and online stores would be good examples. But in January they did it all. of clothes and restaurants saw a rebound “.
Zandi said he expects total retail sales to increase 2.1%, according to business data provided by software firm Cortera, which tracks transactions for small and medium-sized businesses.
“Cortera’s numbers are unequivocally strong. I think we’re on the move, unless the pandemic goes in the wrong direction,” he said. “The economy will be booming.”
According to Cortera, retailers ’spending on unpaid expenses increased 16.7%. Cortera said the level is a 5% increase above December levels, suggesting that retail sales will also increase.
Economists also saw other signs that spending was rising.
“Credit and debit card data suggest retail sales were quite strong,” said Diane Swonk, chief economist at Grant Thornton. “We’ve also gotten some relief from the mitigation measures that should also help, and all of that happened before we had the devastating cold that slowed things down.”
Swonk said stimulus controls were important. “I really think we were heading for a double fall. We had a pretty dramatic slowdown as we got into the end of the year,” he said.
The Biden administration has proposed another $ 1,400 stimulus control that is making its way into Congress. This should also boost consumer spending capacity.
“People are getting vaccinated. This will be another burst of activity,” said Stanley, an economist at Amherst Pierpoint. “I think we’ll see improvements basically from now until the middle of the year. I think it will really start to open in March.”