Retail sales were flat last month after a buoyant March, the Commerce Department said on Friday, as Americans continued spending their latest round of government stimulus checks.
The pace for April was a slowdown from the prior month, when retail sales rose by 10.7 percent, as vaccinations increased and people became more comfortable outside their homes, spending more money on clothing, restaurants, bars and sporting goods. Retail sales, which experienced record drops just over a year ago at the onset of the pandemic, have been closely watched as monthly gauges of the health of the economy and the mind-set of consumers.
The report highlights the bumpiness of the economic recovery in the United States as it emerges from the pandemic. And it shows how connected consumer spending remains to government support. Economists at Morgan Stanley had anticipated a smaller increase in retail sales in April compared with March based on stimulus check distribution, with roughly 83 percent of this latest round distributed in the back half of March.
“Stimulus money is driving retail sales right now,” said Robert Frick, a corporate economist at the Navy Federal Credit Union, which is able to track credit card spending across its members. “The economy hasn’t recovered completely even though we had a strong first quarter.”
Last week, a separate government report showed that job growth slowed in April, a surprise to many economists, while the jobless rate rose slightly to 6.1 percent. The data served as a reminder of the fitful economic recovery and that stimulus money can only go so far.
“Labor market income will become increasingly important in sustaining consumer confidence and spending over the coming months,” the Morgan Stanley economists wrote in a May 7 note.
Retail sales increased in April in categories including restaurants and bars, which posted a 3 percent gain, as well as electronics and appliance stores and grocery stores. Declines were seen in a broad array of categories, including apparel, gas stations, sporting goods and book stores and department stores.
Still, the broader picture is sunny compared with April 2020. Spending at clothing and accessories stores was up more than 700 percent last month, compared with a year earlier, while furniture and home furnishing stores had gone up nearly 200 percent — staggering figures that were a reminder of just how devastating the pandemic was to many parts of the retail industry.
“What we need to remember is retail sales went up a crazy amount in March because of the stimulus, and it’s kind of like they’re stuck up there, so that’s good,” Mr. Frick said. “That means people have continued spending at that high rate.”