NRF: Consumers could help propel economy to fastest growth since the 1980s

Date: Tuesday, May 4th, 2021
Source: Furniture Today

WASHINGTON – The National Retail Federation (NRF) is growing more bullish on its outlook for 2021.

The industry association’s chief economist, Jack Kleinhenz, pointed to a variety of factors that suggest economic growth of 6.6% this year, the highest level since 7.2% in 1984.

“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. His remarks came in the May issue of NRF’s Monthly Economic Review.

He noted the latest edition of the Federal Reserve’s Beige Book affirms that U.S. growth is beginning to accelerate. Key signposts indicate unemployment benefits, government stimulus checks and tax refunds are boosting personal income and purchasing power.

Consumers are “sitting on a stockpile of cash” that could become “a spring-loaded spending mechanism,” Kleinhenz said.

U.S. households saved $2.4 trillion during February alone, approximately twice the amount of average monthly savings during pre-pandemic 2019. That adds to savings accumulated over the past year as consumers hunkered down instead of dining out, traveling or attending sports and entertainment events.

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

Kleinhenz cautioned that comparisons with 2020 are challenging given the disruptions caused by the pandemic, hurricanes, wildfires and other unique events.

“While there is a great deal of uncertainty about how fast and far this 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.

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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