NRF Expecting 2021 Retail Sales to be Much Stronger Than Previously Stated
Consumers are spending: 2021 retail sales could reach as high as $4.56 trillion.
The National Retail Federation (NRF) is doubling down on its prediction of retail sales growth for 2021 — literally.
On June 9 during NRF’s inaugural State of Retail and the Consumer event, the retail trade association’s Chief Economist Jack Kleinhenz said the organization was revising its annual forecast for the year and expecting that retail sales will now grow between 10.5% and 13.5% to more than $4.44 trillion this year as the economy accelerates its pace of recovery. In February, the NRF projected that retail sales would grow at least 6.5% in 2021. The association said that forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus (the announcement came prior to the passage of the American Rescue Plan Act).
“We are seeing clear signs of a strong and resilient economy,” Kleinhenz said during the virtual event. “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.”
NRF President and CEO Matthew Shay said the economy and consumer spending have proven to be much more resilient than initially forecasted.
“The combination of vaccine distribution, fiscal stimulus and private-sector ingenuity have put millions of Americans back to work,” he added. “While there are downside risks related to worker shortages, an overheating economy, tax increases and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend. The pandemic was a reminder how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.”
NRF forecasts that 2021 retail sales could reach as high as $4.56 trillion. Non-store and online sales, which are included in the total figure, are expected to grow between 18% and 23% to a range of $1.09 trillion to $1.13 trillion as consumers continue to utilize e-commerce. The numbers exclude automobile dealers, gasoline stations and restaurants.
The updated figure compares with $4.02 trillion in total retail sales in 2020. Of that, $920 billion was from purchases made through non-store and online channels.
In addition, NRF now projects full-year gross domestic product 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.
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 he anticipates the fastest growth the U.S. has experienced since 1984.
The NRF said its figures are based on the U.S. Census Bureau’s revisions and adjustments released on April 26.