NRF boosts US retail sales predictions for 2021
The National Retail Federation (NRF) has announced that, in light of continued economic recovery, it now expects U.S. retail sales to rise between 10.5% and 13.5% year over year in 2021, up from a previous prediction of an increase in the range of 6.5% to 8.2%.
“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,” explained NRF chief economist Jack Kleinhenz in a release. “We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well.”
The Federation’s new forecast would result in total annual retail sales of between $4.44 trillion and $4.56 trillion. This compares to the organization’s previous financial guidance, which ranged from $4.33 trillion to $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,” added Kleinhenz. “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.”
As pointed out by the NRF itself, the organization does not take the revision of its annual forecast lightly, but additional economic data that has presented itself since February has suggested that its original guidance will easily be surpassed.
In the first five months of this year, national retail sales tracked 17.6% above the same period in 2020, a rate of growth which is likely to see total annual sales exceed the initial forecast, even if revenues were flat for the rest of the year.
Furthermore, sales have seen year-over-year growth every month since 2020, while this May posted the second-highest level of retail sales in the NRF’s records: $388.6 billion. The highest level ever recorded by the organization was $414.7 billion, seen during the height of the holiday season in December 2020.
With the U.S.’s GDP having already seen a 6.4% increase in the first quarter, the NRF now expects it to rise 7% over the course of the year, the highest rate since 7.2% in 1984. Previously the Federation had forecast an increase of between 4.4% and 5%.
Personal consumption expenditures, including goods and services, were expected to experience 4.5% year-over-year growth in 2021, but are now expected to grow 7.5%.
“As the pandemic illustrated so vividly in 2020, we should expect the unexpected. 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,” concluded Kleinhenz.
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