NRF Even More Bullish on Surging U.S. Economy

AS ‘NORMAL’ RETURNS, AMERICANS SET TO SPEND The U.S. economy is poised for a big comeback. That’s according to the National Retail Federation’s chief economist, Jack Kleinhenz, who said that with more businesses reopening and bringing employees back to work, the U.S. economy is on firm footing and could see its fastest growth in more than three decades.

“The consumer is nearly always the key driver in the economy, and with the consumer in good financial health, a sharp demand is expected to unfold over the coming months,” Kleinhenz said.

Although there is a great deal of uncertainty about how fast and far the economy will grow in 2021, surveys show an increase in individuals being vaccinated, more willingness
to receive a vaccination, increased spending intentions and comfort with resuming pre-pandemic behaviors like shopping, travel and family gatherings, Kleinhenz said.

“This feel-better situation will likely translate into higher levels of household spending, especially around upcoming holidays like the Fourth of July and spending associated with back-to-work and back-to-school,” he added.

Kleinhenz’s remarks, which were reported by Chain Store Age, came in the May issue
of NRF’s Monthly Economic Review, which said NRF expects the economy to grow 6.6% this year, the highest level since 7.2% in 1984.

The report said the latest edition of the Federal Reserve’s Beige Book “affirms what the economic data has been signaling: U.S. growth is beginning to accelerate.” Among other favorable indicators, the $2.4 trillion saved by households during February alone was approximately twice the average monthly savings during pre-pandemic 2019 and comes on top of savings accumulated over the past year as consumers stayed home rather than dining out, traveling or attending sports and entertainment events.

In addition, use of consumer credit is up, with outstanding credit surging in February to its highest level since late 2017. The increase “highlights a consumer who is growing more confident as the economy accelerates, job growth picks up and more states lift burdensome restrictions,” Kleinhenz said.

NRF’s calculation of retail sales – which excludes automobile dealers, gasoline stations and restaurants to focus on core retail – is based on data from the Census Bureau, which
recently released its annual revision of retail sales going back to 2013. NRF has revised its numbers accordingly, and now shows 2020 retail sales of $4.02 trillion rather than the
$4.06 trillion originally reported. But 2020 grew 6.9% over 2019 rather than 6.7% because 2019 was revised down to $3.76 trillion from $3.81 trillion.

Even with the revisions, 2020 sales broke the previous record of 6.3% set in 2004 despite the pandemic. NRF has forecast that 2021 retail sales – excluding autos, gas and restaurants – will grow between 6.5% and 8.2% over 2020 to between $4.33 trillion and $4.4 trillion.

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