The House of Representatives on Wednesday passed a long-awaited $1.9 trillion Covid-19 relief package, sending it to President Joe Biden for his signature.
Biden is expected to sign the bill on Friday, according to White House press secretary Jen Psaki. “The bill text will be rechecked, printed and signed by the appropriate leaders in the House and Senate,” she said, before the bill is formally sent to the White House for Biden’s signature.
The package, the first major legislative bill passed by the new administration, includes stimulus payments of up to $1,400 per person, for individuals meeting certain household income requirements. The relief bill also boosts weekly unemployment benefits by $300 and extends a 15 percent increase in food stamp benefits through September. The plan includes funding to ramp up Covid-19 vaccinations, as well as $350 billion in relief to state, local and tribal governments and roughly $30 billion in aid to restaurants, which have suffered through waves of lockdowns and restrictions.
It wasn’t immediately clear how funding would be allocated to state and local governments, but the Los Angeles Times reported that the relief package is expected to send $13.5 billion to the City of Angels, which reportedly saw its budget gap grow to $750 million during the pandemic.
“Passage of the American Rescue Plan Act will provide a needed boost to pharmacies, grocers and retailers working around the clock to administer vaccines to millions of Americans. The resources provided to support this effort, along with funding for schools and local governments, will ensure all segments of the economy have the tools and resources to quickly administer vaccines and safely re-open the economy. We encourage state and local governments to use these new resources to vaccinate front-line retail workers as quickly as possible,” said Michael Hanson, senior executive vice president, public affairs for the Retail Industry Leaders Association.
Retailers have been hoping that money in people’s pockets will help drive more spending at stores. In general, they still expect headwinds in the first quarter, which began last month. But with vaccinations accelerating and the economy beginning to reopen in earnest, the general consensus is that consumers will be out shopping and spending at stores and restaurants in the coming quarters.
Nikki Baird, vice president of innovation at retail platform provider Aptos, which works with more than 1,000 global retail brands, hailed the bill as “excellent news for retail recovery” and “the right boost for consumer spending at a time when they will have a chance to spend in stores where retailers need the most help.”
“For both of the last two relief checks, Aptos customers in non-essential verticals like fashion saw a real impact in terms of a bump in spending but it was limited to some extent by the fact that stores still have capacity limitations,” she said. “This spending, combined with wider vaccine distribution and an opportunity for more stores to be open means that retailers who have been losing out to e-commerce during the pandemic have a chance to revitalize their stores—which in turn will bring back more retail jobs to serve those customers.”
However, Baird offered a caveat for merchants: though many consumers have spent previous stimulus checks on discretionary purchases, those who have been “hit the hardest by the economic impact of the pandemic” might now use these funds for necessities like “debt repayment or rent.” Regardless, she added, “all the stimulus spending that we’ve seen so far has indeed translated into a bump in spending by consumers on non-discretionary retail.”
Meanwhile, Target chief financial officer Michael Feddelke expects sectors such as beauty and apparel, which sagged in 2020, to benefit from a return to social and professional activities.
And TJX CEO Ernie Herrman similarly anticipates a “surge in apparel” sales to materialize in the second quarter. With more people vaccinated each day, consumers will inevitably be ready to “circulate out there more,” he said.
The National Retail Federation last month forecast that annual retail sales in the U.S. this year could grow to between 6.5 percent and 8.2 percent to more than $4.33 trillion, marking the highest growth rate since 2014.