February 17, 2021
Retail sales surged by 5.3% in January after having declined 1.0% in December and 1.3% in November. In the past year sales have risen 7.3%. The drop in sales in November and December reflects smaller-than-normal Christmas sales as the virus began to spread more rapidly and some states responded by enhancing restrictions to, hopefully, prevent the spread of the virus. The January gain appears to reflect the impact of the $600 checks that were mailed to most taxpayers in the second half of that month. Given that some of those checks were not received until February it is likely that sales will continue to climb sharply in that month. At the same time the vaccine distribution has gotten underway and is gathering momentum at the same time that the virus is showing clear signs of abating. That, too, is going to bolster sales in the months ahead.
The increase in sales was widespread with an increase of 3.1% for motor vehicles, 14.7% for electronics, 4.6% for building materials, clothing 5.0%, sporting goods 8.0%, general merchandise 5.5%, nonstore retailers 11.0%, and restaurants and bars 6.9%.
The one category of sales that continues to lag its year-ago level is restaurants and bars. After strong gains from May through September, food services and drinking places fell 0.3% in October, 3.6% in November and 4.6% in December as indoor dining was curtailed.. But sales in January surged by 6.9% for the reasons described above. Restaurant sales are now 16.7% below their year ago level.
Following a 2.5% drop in GDP last year we expected an increase of 6.2% in 2021.
Stephen Slifer
NumberNomics
Charleston, SC
Hi Steve,
How much of the $2T is going to large corporations vs small business?
Hi Brian,
There are tons of different pieces to that program. But it appears to me that the only “big business” that is getting money is the airline industry. Here are some of the highlights:
1. Every taxpayer receives $1,200 check. $500 extra per kid.
2. Unemployed workers get extgra $600/ week for up to 4 months. When couple with state benefits, some will be making more on unemployment than on their day job.
3. Hospitals get $100. Losing money because they are forced to postpone elective surgeries which is wher they make their money. I think they also get a bigger reimbursement from Social Security for treating COVID19 patients.
4. Airlines get $29 billion in grants, $29 billion in loans.
5. Small businesses get tax credit if they keep workers on the payroll.
6. State and local governments get $150 billion. They are losing sales tax and corporate profits + they have expenses involved with the corona virus like police, fire, EMT.
7. Defense Dept. gets $10.5 billion for deploying National Guard to distribute medical supplies, food, etc.
8 Employers get to defer the 6.25% payroll tax which is their portion of funding Social Security.
9. Payments in there for telemedicine, food stamps, farmers.
A little something for everybody.
Steve