National Retail Federation's Chief Economist Jack Kleinhenz Discusses Evidence of Economic Recovery
WASHINGTON, DC - As we braved the first half of 2021, many across the industry were unsure of what the economic recovery process would look like. Although unknowns remain, a newfound hope has emerged as operators begin to find a new path to success. Chief Economist of the National Retail Federation (NRF) Jack Kleinhenz can confirm this, discussing in the July issue of NRF’s Monthly Economic Review evidence of an unprecedented recovery from the COVID-19 pandemic.
“It has become clear that 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.”
The publication expanded on the revised forecast NRF issued on June 9 as part of its inaugural State of Retail and the Consumer event. Further economic data that has come in since February made it clear that the initial forecast would easily be exceeded, a press release explained. Numbers for the first five months of the year showed retail sales tracking 17.6 percent above the same period in 2020, which is a rate of growth that is reportedly likely sufficient to meet or exceed the initial forecast even if sales are flat for the remainder of the year.
“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,” as Kleinhenz said.
The press release went on to note that sales have grown year-over-year every month since June 2020, and the $388.6 billion in sales seen during May was the second-highest level on record, topped only by $414.7 billion during the height of the holiday season in December 2020. The gross domestic product grew at an annual rate of 6.4 percent in the first quarter of this year, and NRF now expects GDP for the full year to grow close to 7 percent—the fastest growth since 7.2 percent in 1984 and far above the 4.4 to 5 percent forecast in February. Personal consumption expenditures, which include both goods and services, are now expected to grow 7.5 percent year-over-year rather than 4.5 percent.
“As the pandemic illustrated so vividly in 2020, we should expect the unexpected,” Kleinhenz said. “But based on the data at hand, things are looking very good for the economy and consumers, and we think it was prudent to update our forecast given the brightening picture.”
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