Michelle CluverWe’re almost at the end of the tunnel. The light’s been getting brighter, and we’re almost stepping out into the sunshine. Economic data and bank earnings from this past week reflect improved optimism in the U.S.
- U.S. retail sales rebounded 9.8% month-over-month (m/m) in March, the consumer got an assist from their stimulus checks and then handily spent.
- Initial jobless claims continued their improving trend. For the week ended April 10, initial jobless claims declined to 576k, their lowest level since the start of the pandemic, and well below the 700k expected by the market. 1
The quick pace of vaccinations, reduced restrictions, and stimulus checks supported both hiring and retail sales. Discretionary services spending was strong, with a 13.4% m/m increase in spending on bars and restaurants. Despite this improvement, retail sales focused on restaurants and bars remained 5% below their pre-pandemic level while aggregate retail sales were around 17% higher, supported by the increased adoption of e-commerce.
YTD retail sales accelerated with both the January and March numbers being boosted by fiscal assistance. It is worth noting that during these periods, restaurants and bars were beneficiaries. As vaccinations continue and the U.S. population approaches herd immunity, we expect to see continued engagement in the discretionary services portion of the economy. Higher sales should encourage hiring in the areas that were most impacted by the pandemic restrictions. After a year in lockdown, it’s not just Millennials itching to get out.
Strong retail sales growth and the improving trend in employment supports the reopening narrative that’s dominated the market YTD. Now we’re starting to see the economic data lining up with the market’s view.
