In March, consumer spending gained 9.8 percent from February, when it fell 3 percent, the U.S. Commerce Department reported.
The jump was almost twice the 5.5 percent that analysts were expecting and a sharp turnaround from February’s 3-percent contraction after previous stimulus money had been spent and a series of storms slowed travel and business activity.
The spending spree was fueled by the treasury’s $1,400 stimulus checks, the bulk of which was spent on car payments, home renovations, and restaurant meals, the department said.
Spending at sporting goods grew the most, up 23.5 percent in March over February as people prepare for summer activities. Clothing stores ranked second in sales gains, adding 18.3 percent month on month in March, with restaurants and bars adding 13 percent.
Many economists believe the strength in consumer spending will continue after the latest round of stimulus money has been spent as the COVID virus comes under control and normal activities reassert themselves.
Spending on travel also is ramping up.
From mid-March to mid-April, more than one million people per day were screened at airports, according to the federal Transportation Security Administration.
American Airlines expects to sell 90 percent more tickets this summer than last, the company said in comments reported by the Wall Street Journal. Delta Airlines has recovered about 85 percent of its pre-pandemic leisure travel volume and could be profitable this summer, the carrier said in a 15 April statement.
TREND FORECAST: With much of society living in locked-up fear during the winter months, and now going back out – plus the trillions in government money being doled out to Americans – the spike in retail sales had been expected.
On the airline front, the big money is in business travel which will not rebound for at least another year. And when it does, it will not come back to pre-COVID War levels. Indeed, the new Zoom world has become part of the new COVID world and businesses are pleased to meet online to cut expenses.
And there has been barely a word from the mainstream media about the devastating effects of the COVID War on the convention and trade show sectors, which have not only damaged the hospitality and hotel sectors and lost tax revenue for cities that host them but has also sharply cut business travel.
Oil: Earlier today, oil prices ticked up a bit on the news of an outage in Libya, but Brent Crude fell 56 cents to close at $66.49 a barrel. West Texas International fell 77 cents, closing at $62.61 a barrel on news of rising COVID cases and expectations for more lockdowns which will, in turn, lower demand.
TRENDPOST: The Organization of Petroleum Exporting Countries (OPEC) raised its 2021 oil demand forecast by 100,000 barrels a day and lifted its outlook for global economic growth this year from 5.1 percent to 5.4 in its April market report.
The sunnier forecast for the second half of 2021 was prompted by ongoing stimulus spending, continuing vaccination distribution, and the probability that lockdowns would decrease in number and severity as the year goes on, OPEC said.
The forecast focused on the 37 relatively wealthy nations belonging to the Organization for Economic Cooperation and Development (OECD) but also noted that China’s oil demand remains robust.
The OECD countries’ oil inventories shrank by 45 million barrels in February but remain 57 million barrels above their five-year average as measured from 2015 through 2019, OPEC’s report noted.
It should also be noted that the higher oil prices rise, so too will inflation. And, the more money people have to spend on gas on oil, the less will be spent on goods and services.
