The Commerce Department said US retail sales soared a seasonally adjusted 5.3 per cent in January from the month before. It was the biggest increase since June and much larger than the 1 per cent rise Wall Street analysts had expected. The jump was largely driven by the $US600 ($774) stimulus checks that went out to most Americans in late December and early January. The data shows that recession-hit Americans are eager to spend cash on necessities, and aren’t saving the funds — which is the goal of stimulus checks.
It potentially means that additional stimulus, likely in the form of $US1400 checks in the $US1.9 trillion ($2.5 trillion) stimulus plan, will likely provide a necessary boost to the economy. Optimism that Washington will come through on trillions of dollars of more aid for the economy and encouraging company earnings reports have helped stocks grind higher this month, along with hopes that the coronavirus vaccine rollout will set the stage for stronger economic growth in the second half of this year.
“We’re keeping this economy humming despite the last several weeks, which have been really challenging,” said Katie Nixon of Northern Trust. “That’s notable, it’s a clue to what will happen if we get an additional stimulus package.”
Later Wednesday investors will be looking over minutes from the Federal Reserve’s last policy meeting, held in January. It will be a chance to see what the central bank expects for inflation.