Signs of economic hope are growing
Retail sales report beats expectations, and jobless claims decline sharply
The U.S. economic recovery is gathering steam, renewing confidence that a vibrant revival awaits as the pandemic recedes.
After months of false starts, evidence is mounting that the economy has definitively turned a corner, with more growth on the horizon. Job gains last month were the strongest since August. There are signs that the snarled global supply chain may be untangling.
And in dual reports Thursday, the government reported more good news: Retail sales in March blew past expectations, rising nearly 10 percent, and jobless claims last week fell to their lowest level of the pandemic.
Even as the country is still straining to contain the virus, as millions of people remain unemployed and as a large portion of the population remains unvaccinated, the data suggests that the long-heralded economic rebound is within reach.
“I’m feeling quite optimistic,” said Gregory Daco, chief U.S. economist at Oxford Economics. “I think what we’re seeing is evidence of this booming economy that we’re going to be seeing over the coming months.”
In the year since the coronavirus smothered the economy, economists have held out hope for a significant turnaround defined by plentiful job opportunities, higher wages and supercharged spending after months of pent-up demand. But the tantalizing promise at times appeared unlikely at best: After a period of growth over the summer, job gains largely stalled heading into the new year. New state unemployment claims spiked to over 1 million in one week in January. Retail sales, bolstered by stimulus payments, jumped in January only to slide the next month. Yet recent weeks have delivered increasing reason for hope. With a fresh round of federal payments in their pockets and vaccines in their arms, many Americans have begun shopping and dining out with renewed alacrity, driving retail sales. A 9.8 percent increase last month was a strong comeback from the nearly 3 percent drop in February, when previous stimulus money had dissipated and a series of winter storms made travel difficult.
The increase was broad-based, including big-ticket purchases like cars and discretionary spending on sporting goods, which economists interpreted as a sign of strong household income and growing optimism. Sales of clothing and accessories rose 18 percent, while restaurants and bars recorded a 13 percent increase — demonstrating how many areas of consumption are bouncing back.
“I found it very encouraging that there are signs that people are waking up from hibernation, buying new clothes and going out to restaurants,” said Beth Ann Bovino, U.S. chief economist at S&P Global. “I think people are feeling optimistic that the United States will win the war on the virus. And they have good reason to be hopeful.”
Many economists said the strong retail sales were likely to continue.
The gradual return to normal activities as business restrictions ease has in turn prompted employers to recall workers — and this time, to hold on to them. The Labor Department reported Thursday that the number of first-time claims for state unemployment benefits fell sharply last week, to about 613,000, the lowest level since the start of the pandemic. That was a decline of 153,000, the largest week-over-week decrease since the summer.