Revised NRF Report: Economic Recovery Post-COVID Stronger than Expected
The economy is expected to bounce back at a stronger rate than originally predicted in the second half of 2021, said National Retail Federation Chief Economist Jack Kleinhenz in the Monthly Economic Review earlier this month.
"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," he said. "We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well."
Kleinhenz's remarks come on the heels of NRF's recent revision of its annual forecast, which now anticipates retail sales to grow in 2021 between 10.5% and 13.5%, a range equaling more than $4.44 trillion this year. These new predictions are up roughly 4% from the previous forecast.
"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."
Economic data that surfaced in the months since February made it clear that the initial economic forecast would be easily exceeded, making a revision necessary, according to a press release from NRF.
Numbers for the first five months of 2021 showed retail sales tracking 17.6% above the same period in 2020, a growth rate likely to meet or exceed the initial forecast, the press release states.
Gross domestic product also grew at an unexpectedly large rate, reaching 6.4% in the first quarter of this year. NRF expects GDP to grow close to 7% for the entire year, the fastest growth rate since 1984 and well above the original prediction. Personal consumption expenditures, which include both goods and services, are now expected to grow 7.5% year over year rather than 4.5%, according to the release.
"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."
---Annacaroline Caruso, editorial associate