The National Retail Federation has revised one of its most closely watched forecasts upward, anticipating “the fastest growth the U.S. has experienced since 1984," as consumer spending accelerates.
The NRF on Wednesday forecast that 2021 retail sales will total between $4.44 trillion to $4.56 trillion, up from $4.02 trillion in 2020. (The NRF numbers exclude automobile dealers, gasoline stations and restaurants.).
The revised forecast surpasses NRF’s initial projection of at least 6.5% growth which was made in February. The group noted it made the initial forecast when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus. (The forecast was made prior to passage of the American Rescue Plan Act.)
Non-store and online sales, which are included in the total NRF figure, are expected to grow between 18% and 23% this year, ranging from $1.09 trillion to $1.13 trillion amid ongoing demand for e-commerce. By comparison, non-store and online sales totaled $920 billion in 2020.
In addition, NRF now projects full-year GDP growth to approach 7%, compared with the 4.4% and 5% forecasted earlier this year. Pre-pandemic levels of output are expected to return this quarter.
“We are seeing clear signs of a strong and resilient economy,” NRF chief economist Jack Kleinhenz said. “Incoming data suggests that U.S. economic activity continues to expand rapidly, and we have seen impressive growth. Most indicators point toward an energetic expansion over the upcoming months and through the remainder of the year.”
Kleinhenz said that the sheer amount of both fiscal and monetary policy intervention has lifted personal income and filled the well of income that was lost back in March and April of last year, creating an overabundance of purchasing power.
Given the strength of consumer spending, Kleinhenz said that he anticipates the fastest growth the U.S. has experienced since 1984. The reopening of the economy has accelerated much faster than most had believed possible, even a year ago, he added.