By at 17 February, 2021, 11:10 am

by Raymond J. Keating-

After three months of declines, retail sales took a major jump higher at the start of 2021, as reported by the U.S. Census Bureau.

Specifically, retail and food services sales in January increased by 5.3 percent, and excluding autos and gasoline, sales leaped by 6.2 percent. Looking at data going back to 1992, the January jump of 5.3 percent ranked among the very highest monthly gains – only exceeded by the fluctuations around the pandemic hitting last year and in the month after 9/11.

Source: Federal Reserve Bank of St. Louis, FRED

Retail sales obviously were impacted in major ways when the pandemic first hit, with big declines in March and April. But more so than other aspects of the economy, retail sales snapped back from May to September. In fact, January 2021 retail and food services sales were up by 7.4 percent versus a year earlier.

But those three months of decline to close out 2020 certainly warranted a concern. In addition, food services and drinking places in January 2021 were still down by a staggering 16.6 percent compared to January 2020.

However, if the overall retail sales growth registered in January holds, that obviously would be good news. That will depend upon pandemic developments, policy choices, and the rate of growth in entrepreneurship, business investment and jobs.

As SBE Council has noted many times in the past, consumers are largely followers. If businesses are being created and expanded, accompanied by increased hiring, then retail sales growth will chug along.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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