A fresh batch of stimulus checks sent consumer purchases surging in March as the U.S. economy continued to get juice from aggressive congressional spending.
Retail sales rose 9.8% for the month, the Commerce Department reported Thursday. That compared to the Dow Jones estimate of a 6.1% gain and a decline of 2.7% in February.
A separate report showed that first-time filings for unemployment insurance plunged, with the Labor Department reporting 576,000 new jobless claims for the week ended April 10.
Consumers, though, took their $1,400 stimulus checks and spent aggressively. The money came courtesy of the nearly $1.9 trillion American Rescue Plan Act that Congress passed in March.
The legislation took total stimulus and rescue payments approved in the year since the Covid-19 pandemic began to about $5 trillion, fueled by red ink that fiscal authorities say is necessary to keep the economy running.
March’s retail sales report was yet another sign that consumers overall remain healthy and willing to spend, even though increasing amounts of stimulus checks are going towards savings rather than spending.
A recent report from the New York Federal Reserve indicated that stimulus recipients expect to save 41.6% of their checks and spend 24.7%. Following the first round of checks in the spring of 2020, consumers saved 34.5% and spent 29.2%.
As the recovery has gained speed, consumers have had to deal with the strongest signs yet of inflationary pressures building. The consumer price index rose 2.6% in March from a year ago, thanks in part to a surge in gasoline prices. The year-over-year gain was the largest since August 2018.
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