BACK

Wealth and Wants

Retail and food service sales jumped in January

While the pandemic won’t be over yet, the worst is hopefully behind us

Summary

With the arrival of stimulus, tax refunds, and health developments, sales in U.S. retail and food service industries surged to record-highs in January in spite of the coronavirus.

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Sales in U.S. retail and food service industries surged in January thanks to additional government stimulus, ending a three-month decline. Month-over-month, January sales were up 5.3% compared with December, according to data released by the Census Bureau on Feb. 17. Calculated year-over-year, the increase was a stunning 7.4%. Total sales came out to $568.2 billion and blew past the previous monthly record ($552.8 billion) set in Sept. 2020.

Normally, January is a slow month for retailers, but nothing has been normal about the past year. In January, the improvement in retail sales came despite a continued COVID-19 surge, which brought grim records in daily U.S. deaths and cases. But consumers are learning to adapt and are spending despite the virus. The data indicates that many consumers were quick to part with the $600 they received from the federal government in early January.

Read more from our credit card experts.

Ask Ted a question.

The January gains were broad-based

Every major category showed month-over-month improvement. Electronics and appliance stores posted a 14.7% monthly gain, furniture stores were up 12% and sales by nonstore retailers (e-commerce websites such as Amazon.com) grew 11%.

Some recently downtrodden sectors notched meaningful improvement as well. The “food services and drinking places” grouping – a bellwether for in-person activity – was up 6.9% in January. Of course, that’s still down meaningfully (16.6%) from the previous year. We even saw signs of life from department stores (+23.5% in January, down 3.0% year-over-year) and clothing retailers (+5.0% in January, down 11.1% year-over-year).

This data is an important counterpoint to the growing fears that the U.S. could be headed for a double-dip recession. It’s a complicated issue because technically, the National Bureau of Economic Research hasn’t declared the (initial) COVID-19 recession to be over yet. Their decisions tend to lag, however. The Bureau of Economic Analysis reported that U.S. GDP expanded in the third and fourth quarters of 2020 (although the deep decline in the first half of the year still left the full year in the red).

Retail sales cratered, like so many other things, in March and April of 2020. They recovered all of those losses in May and June, making for a true V-shaped recovery. Growth since then has been mixed, however. Modest dips followed small gains in the third quarter in the fourth quarter. The expansion had lost momentum. That all changed in January.

See also: My 2021 credit card predictions

What happens next

I think February will bring a temporary slowdown for retailers. Cold and snowy weather has gripped much of the nation, including unusual (and populous) locations like Texas, which has prompted many stores and restaurants to close temporarily. Though so much spending has shifted to online, I still believe the harsh weather will be a drag on February sales.

Also, while February could still benefit to some extent from the January stimulus payments, most of that impact has probably already been felt. The next round of stimulus payments will likely arrive in March – which should coincide with tax refunds for many households.

March could be a huge month for consumers, between more stimulus, tax refunds and warmer weather. The virus ebbed a bit in February and hopefully, that trend will continue. Wider vaccine availability will provide a big boost, too. I’m optimistic that the spring will lift moods and fortunes. While the pandemic won’t be over yet, the worst is hopefully behind us.

See also: Best credit cards for online shopping

Have a question about credit cards? Email me at ted.rossman@creditcards.com and I’d be happy to help.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Wealth and Wants

How to dispute an error on your credit report

Errors on your credit report can severely harm your credit score. Dispute any errors as soon as you see them.

See more stories
Credit Card Rate Report
Business
14.22%
Airline
15.56%
Cash Back
15.94%
Reward
15.82%
Student
16.12%

Questions or comments?

Contact us

Editorial corrections policies

Learn more