03/23/2021
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RETAIL GETS READY FOR ’21 ‘REVENGE SPENDING’ BLITZ
AMERICANS STOCKPILE $1.7T AMID PANDEMIC
A year into a pandemic that’s devastated lives, jobs and the economy, those who are lucky enough to have disposable income are ready to go out and splurge — even if they still have nowhere to go in that stunning dress or those brand new sneakers. Some are calling this “revenge spending.”
U.S. retail sales are near record highs and employment and vaccinations are on the rise. Americans have amassed a massive stockpile of excess savings — Bloomberg Economics estimates it to be about $1.7 trillion since the beginning of the pandemic through January. And that’s about to be bolstered by a new round of stimulus payments.
As the economy reopens, consumer spending over the next two quarters is likely to be the strongest such period in at least 70 years with a rebound in services leading the way, according to economists at Wells Fargo & Co.
“A lot of the snapback in spending will come from those more leisure expenditures — your discretionary expenditures,” said Shannon Seery, an economist at Wells Fargo. Those are the areas that “we really expect to bounce back once the economy returns to some semblance of normal.”
“Revenge spending” was seen as early as last April in China after the government began easing back to normalcy after the nation was the epicenter of the coronavirus pandemic in its early days.
While the U.S. economy will likely reopen gradually over the course of 2021, the federal government is already starting to distribute stimulus checks. Research suggests one-time payments boost spending more than steady payments that lead to a higher income.
“This round of stimulus is coming at the same time that the economy is properly reopening,” said Michelle Meyer, head of U.S. economics at Bank of America. “If you have a lot in your bank account already, you don’t have very much debt to pay off, you probably do feel more comfortable spending the stimulus check.”
Even the previous round of $600 stimulus checks, which were less than half the size of the incoming $1,400 payments, helped drive a January spike in discretionary purchases. U.S. retail sales jumped by the most in seven months amid increased spending on clothes, electronics, home furnishings and more. Department stores saw a nearly 21% increase in sales from the prior month.
And there’s room to grow, since sales at many types of stores and restaurants remain below their pre-pandemic levels. While spending has eased from January’s breakneck pace — in large part due to severe winter weather — the new round of direct checks will give fresh support to consumers. The $1,400 payments could give restaurant sales a lift for up to seven weeks, according to an analysis by Bloomberg Intelligence.
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The Daily News Of TV Sales
March 23, 2021