The Indicator from Planet Money - Stimulus And The Shopper

Stimulus checks have started to hit many Americans' bank accounts. Will this give an extra boost, or maybe even a lifeline, to retailers?

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What is the indicator from Planet Money? I'm Stacey Vanek Smith. And I'm the coronavirus pandemic and recession and the employment prices that it brought did not hit everyone in the US economy equally and one of the clearest places we can see that is in the retail sector last year even as unemployment levels were the highest we've seen since the Great Depression retail sales took off the hit an all-time high a record and that's partly because a lot of people who were able to keep their jobs, but weren't necessarily able to travel or eat out or spend their money on those kinds of things started spending the money on stuff instead home sale spiked and also exercise equipment home office furniture Electronics outdoor furniture. Also took off and fire pits were selling out food in cookware. We're selling huge, you know stuff for the kitchen and On a related note athleisure clothing saw a big

You know people buying stretchy pants stretchy pants. I have more stretchy pants that I used to.

Lifestyle has changed what we buy like skin care products have done really well, I think because we're all staring at our faces on Zoom all the time and it's not healthy dollars on like makeup and face cream to try to improve that experience yet. Not every retailer was flying high though. It's been really lean times for some of them a lot of small businesses closed their doors, for example, or just really struggled but some big businesses have also struggled J.Crew Neiman Marcus Guitar Center JCPenney GNC. I'm running out of breath be all filed for bankruptcy. And also last month all of that spending everyone have been doing all that seems to be kind of running out of steam retail sales started to dip a bit now though stimulus checks are arriving and a lot of retailers could see a boost $1,400 stimulus checks are coming to most Americans and that will put really desperately needed money into the hands of people to do things. Like pay rent buy food pay bills, but

Also, maybe by some things they've been waiting to get like for their home office for online school or maybe just for fun. And this is a big deal because consumer spending new people buying goods and services that makes up 3/4 of the US economy. You might say so go shopping so goes down on me. So the big question of the hour is will the stimulus checks give an extra boost to retailers. She's an analyst at Forrester and the answer to break down pandemic retail and look at what effect the stimulus money could have that conversation after the break.

This message comes from NPR sponsor fundrise making investing in private real estate as easy as investing in stocks bonds or mutual funds build a more Diversified portfolio today at fundrise fundrise. Com in Decatur. This message comes from NPR sponsor interactive brokers. And zynga's number one best broker for mutual funds KRS mutual funds Marketplace provides low-cost access to over 40,000 mutual funds learn more at funds Forester. Thank you for joining us. Thank you. It's always great to be on what's about to happen to that sector as stimulus money goes out across the economy is interesting because retailers know exactly how much money a lot of people are going to be getting and that could be an opportunity to kind of.

Target that amount for instance our editor Julie Myers got an ad from an online retailer for 1400 items that were $1,400 worth of class and I feel like we might start to see a lot of these kinds of bad surfacing soon. So I guess what is this round of stimulus checks mean for the retail sector there were two previous stimulus checks prior to this one. And this one is bigger than either of the previous two. So there was the one that was the $1,200 one in early in the pandemic. There was the $600 one in December. And now this one is a $1,400.01 bigger than than the previous ones. So even with a $1,200 stimulus people for the most part spent it on essential things. I spent it on rent or they pay down debt or they will paying off their credit card bills. You did have like number, you know, six or seven down on the list of things that people would do as they would buy discretionary.

As soon as that stimulus check that first stimulus check dropped in April when I would argue it was you know at the height of uncertainty is it was at the peak of lockdowns within days you did see a list in consumer spending a treat out similar things after the second stimulus check so it would stand to reason that absolutely this Thursday me let's check will help retail and especially its company seem to be down and we are seeing improvements in some of the unemployment numbers C is even a greater percentage of that stimuli because people may feel some people some portion of people may feel more financially secure that it will absolutely discretionary retail.

They were Wendy $1,200 to me was checks came out. I mean back then there was just an incredible amount of uncertainty liquid no idea how long any of this was last now. I mean, we got vaccines things are starting to open back up again. It seems like maybe there's just less overall uncertainty right now. You're absolutely right. I mean the end is not only in sight but you know, there's this sense of returning to normalcy. And when you when you have that some of that money that would have gone into savings is now going into discretionary spending and you may also even have you no less of an me to spend as much on things like ranch or hang down your debt because you have other sources of income to to supplement you is there any category? That's just

You think still going to really struggle like that is just not even close to coming back travel this Russian business travel and that may never come back to the degree that was pretend Amex because people have discovered that you can host a significant percent of meetings and virtually and still achieve a fair amount of success so that I think will will be this afternoon in retail that will be very very challenged probably for a couple of years. And what about some business clothes. What about like professional suits jackets that has struggled. I mean I've had retailers being like when is this going to come back? When are people going to go back to the dress code anyways, so he could have if people aren't back in the office and they're not traveling. They're certainly not going to be buying the clothes and the accoutrements they they need for those.

On the other hand we did here. I think like Urban Outfitters said that could be a caterer that that some of those outfits may be coming back. If for nothing else and other things they would have normally done in the spring they are doing in some parts of the country at least in 2021. So you need clothes for those things would really like, is there anything that you spent money on over the last year that you didn't spend money on before like, I don't know outdoor furniture or anything that kind of was kind of a new expense. We probably spent money and I shouldn't say this on National radio, but I'm probably more on alcohol then and then I ever have alcohol.

Which which of course led to the feedback loop of needing stretchy pants needing store. Thank you so much for talking with me. It was great to talk to you. Again. This episode of the indicator was produced by Jamila Huxtable and fact-checked by Sam thigh. It was edited by Julie Myers and indicator is a production of NPR.

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