Consumers Are Spending Like There’s No Tomorrow

Next Thursday we will get the March retail sales report. A good reading is largely priced in, based on the amazing alternative data we have witnessed. Merrill Lynch expects 11% monthly ex-autos sales growth. Redbook same store sales growth for the week of April 3 was 10.6%, which was up from 9.8% the week before. This bump wasn’t just catalyzed by the stimulus. It is being supported by the economic reopening which is now well underway.

The seven-day average of daily deaths from the virus has fallen to 783 on April 8. America is speeding towards being fully vaccinated. At the current pace, 75% of Americans will be vaccinated in three months. It looks like June or July will approximately be when we reach that point. Investors are much more concerned about Europe and emerging markets, such as India. It’s taken as a given that the virus will be vanquished this summer in America.

The table below shows Bank of America (BAC) card spending growth in a few major categories in the past six months.

Airlines had a 37.5% sequential increase in spending in March, which followed 17.8% growth in February. Airline spending is on fire. Leisure trips are exploding. Once business trips recover in the next few months, airlines will face the biggest bump in demand ever. Restaurants are doing extremely well now that most restrictions are gone.

Lodging spending growth was 15.8% sequentially. Growth has been in the double digits for three straight months. April should be even stronger. Spending on furniture was up 15%. People are still upgrading their living spaces.

Furthermore, spending on furnishing hotels and offices should spike as people get back to the office and go on trips. We aren’t certain if this type of furniture spending is included in this data. Most large corporations haven’t brought workers back to the office. They are waiting until most of their employees are vaccinated, which should come in one to two months depending on the company.

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