Checking in on Retail Trends and the “Fifth Avenue Flight”

Stimulus Checks Spur January Spending Spike

In January, millions of Americans received $600 stimulus checks. Data released yesterday shows that, as people spent this stimulus money, retail sales climbed by 5.3% in January. Economists only predicted gains of 1.2%.

Spending rose in every major category last month. Electronics and appliances led the way, increasing by 14.7%. Spending on home furnishings was up 12%. Even restaurants and bars, which have faced severe hardships during the pandemic, saw gains of 6.9%.

Retailers Follow Consumers to Florida

Region-specific data shows that, as Americans are moving to new locations in droves, retailers are following. For example many people have relocated to Palm Beach, Florida over the past year, either temporarily or permanently. A large portion of these people have come from New York, but others hail from Chicago, New England, and California.

Retailers like West Elm (WSM), Urban Outfitters (URBN), and Lululemon (LULU) are rushing to open new locations in the area. In addition to retailers, some financial institutions are also making the move. Elliott Management has shifted its headquarters from midtown Manhattan to West Palm Beach and Goldman Sachs (GS) is considering opening offices in Palm Beach.

Looking Ahead

As retail patterns change, analysts are eying inflation trends. As more money has been pumped into the economy, the producer price index, a metric tracking price movements from the point of view of sellers, climbed 1.3% last month. This was the most significant monthly gain since the measure started in December 2009. Some inflation can help spur economic activity, but too much can cause problems.

Looking ahead, analysts are unsure exactly how consumers will respond as vaccine rollout efforts continue. Additional stimulus from the federal government will also impact trends. Retail patterns have been difficult to predict this year, and there could be more surprises in the upcoming months.

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