NRF Stands by 2021 Retail Forecast, Says Economy Hinges on COVID-19
COVID-19 will continue its hold on the retail industry in 2021, remaining “the largest uncertainty and the biggest risk the economy faces,” said National Retail Federation Chief Economist Jack Kleinhenz Wednesday. NRF expects to reach its $1.14 trillion-$1.19 trillion spending…
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forecast in 2021 regardless of whether Congress passes the $1.9 trillion stimulus package being considered, but the measure “could provide an additional boost to consumer spending as seen with other relief efforts over the past year,” Kleinhenz said. The pace of growth could be “patchy” across the country, given differences in demographics, industrial base, and state and local government policies, but Kleinhenz sees a “return to normalcy” beginning in Q2. “There is no doubt the economy is positioned for growth in 2021,” but how much growth will depend on “a single non-economic force -- the coronavirus,” he said. Macroeconomic conditions should improve as more vaccines are distributed and COVID-19 infections decline, “yet the road is never straight, and we have challenges ahead,” Kleinhenz warned. The economist noted pent-up demand that can be “accelerants for growth,” including shored-up savings accounts, high stock values, increased home prices, enhanced government support and "record-low interest rates despite the pandemic,” while employment and wages are growing, and consumers have “plenty of purchasing power.” The pandemic has fortified online shopping growth, which increased 21.9% last year and is expected to grow 18%-23% in 2021 as many consumers new to e-commerce last year “are likely to continue shopping online.” 2020 had a shift toward spending on goods rather than services, which normally make up 70% of consumer spending, he said. NRF expects retail to continue to benefit from that shift, but Kleinhenz said some pre-COVID-19 services spending will return, “particularly among affluent households, who spend more on services and are likely to resume those activities once it is safe to do so.”