NRF economist says recovery is a sure thing

As retailers head into the second half of 2021, the “great uncertainty” that clouded the nation’s economic outlook earlier in the year has transformed into evidence of an unprecedented recovery from the COVID-19 pandemic, said Jack Kleinhenz, chief economist, National Retail Federation (NRF).

“It has become clear the U.S. economy and retail sales are growing far faster and more steadily than anyone could have expected just a few months ago,” Kleinhenz said. “We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well.”

NRF now expects retail sales during 2021 to grow between 10.5 and 13.5 percent over 2020, to a range between $4.44 trillion and $4.56 trillion. That compares with the initial forecast released in February of between 6.5 percent and 8.2 percent growth and a total between $4.33 trillion and $4.4 trillion.

“Our initial forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus,” Kleinhenz said. “Since then, we have seen spending grow, vaccines have become available to virtually anyone who wants one, infections have fallen and additional stimulus in the form of the American Rescue Plan has been signed into law.”

Revising the forecast is something NRF doesn’t take lightly because ups and downs in monthly retail sales figures coupled with multiple revisions and long lags before the data becomes final make it “difficult to separate the signal from the noise,” Kleinhenz said.

But economic data that has come in since February has made it clear that the initial forecast would easily be exceeded. Numbers for the first five months of the year showed retail sales tracking 17.6 percent above the same period in 2020 – a rate of growth likely sufficient to meet or exceed the initial forecast even if sales are flat for the remainder of the year.