Restaurant and Retail Sales Increased 10% in March, Largest Boost in Nearly a Year

Sales at retail stores and restaurants in the U.S. increased by 10 percent in March, signaling an economic recovery and the biggest boost amid the COVID-19 pandemic in nearly a year.

According to a report from the Commerce Department, retail sales soared by 10 percent in March after dropping to about 3 percent the month before. That marks the biggest increase since last May, when stores and restaurants first began reopening after the first wave of COVID-19 lockdowns.

The boost in sales comes at a time when economic growth is accelerating quickly, with most Americans benefitting from coronavirus stimulus and the amount of unemployed citizens sharply dropping.

The U.S. Department of Labor said Thursday that the number of Americans applying for unemployment assistance fell to 547,000 last week, which is the lowest it has been since the pandemic first began, according to the Associated Press.

For more reporting from the Associated Press, see below.

Retail sales
Retail and restaurants sales increased by 10 percent in March, marking the biggest boost in nearly a year. In the photo, people wearing face masks walk in the popular shopping section of SoHo in New York City, on March 25, 2021. TIMOTHY A. CLARY/AFP/Getty Images

The Labor Department said Thursday that unemployment applications declined 39,000 from a revised 586,000 a week earlier. Weekly jobless claims are down sharply from a peak of 900,000 in early January. At the same time, they're still far above the roughly 230,000 level that prevailed before the viral outbreak ripped through the economy in March of last year.

About 17.4 million people were continuing to collect unemployment benefits in the week that ended April 3, up from 16.9 million in the previous week. Most of the increase occurred in California and Texas. In California, recipients of a federal program for the long-term unemployed jumped nearly 50%, a sign that the state likely processed a backlog of claims that had been filed earlier. Other states, too, have been struggling with backlogs of applications.

Still, the number of ongoing recipients has declined by about 2.3 million from early March, when the figure was 19.7 million—a sign that more people are being hired. Some long-term unemployed may have also exhausted all their benefits.

The overall job market is making steady gains. Last month, the nation's employers added 916,000 jobs, the most since August, in a sign that a sustained recovery is taking hold. The unemployment rate fell from 6.2% to 6%, well below the pandemic peak of nearly 15%.

Economic growth is accelerating so fast that the principal concerns surrounding the economy have shifted from a high unemployment rate and anemic spending to bottlenecks in company supply chains and the difficulty some businesses say they are having in finding enough workers.

Those issues, in turn, have fed concerns that the Federal Reserve's low-interest rate policies could fuel a spike in inflation. Last month, wholesale prices jumped 4.2% compared with a year earlier, the biggest 12-month increase in nearly a decade.

Still, consumer prices are, so far, rising at a more restrained pace. They increased 2.6% in March from a year earlier, mostly because of a jump in gas prices. Excluding the volatile food and energy categories, core inflation rose just 1.6% in the previous 12 months.

Economists expect inflation to rise steadily in the coming months because prices fell about a year ago when the pandemic first hit and the economy largely shut down. That makes comparisons to price levels a year ago look particularly large.

Fed Chair Jerome Powell said he expects that higher inflation to prove temporary and that supply bottlenecks will eventually clear as shipping picks up and factories produce more parts.