GDP Growth Hinges on Labor, as Simulus Impact Wanes, Says NRF

been spent or set aside in bank accounts, said NRF Chief Economist Jack Kleinhenz. “Consumer spending is currently far above pre-pandemic levels thanks to unprecedented monetary and fiscal policies that have backstopped demand by putting money into wallets,” Kleinhenz said: While consumers remain in the mood to spend, “the labor market and job creation will play an increasing role in their ability to do so.” The number of Americans out of work remains “well above pre-pandemic levels, while the number of initial jobless claims is returning to normal, he said. Most of the uptick in U.S. inflation has been driven by supply chain bottlenecks and low inventory levels, but high labor costs are often “passed on to consumers and are considered a precursor of broader inflation,” Kleinhenz said, saying NRF will monitor market developments to determine if expanded payrolls expected in coming months influence inflationary pressure as wages increase. The spreading delta variant could cause “relatively modest” disruption to retail sales but “not likely enough” for the association to revise its 2021 forecast calling for growth of 10.5%-13.5% vs. 2020. The variant could have a negative impact on restaurants, travel and accommodations, possibly causing a shift back to spending on retail goods after those service sectors saw gains this summer as consumers returned to pre-pandemic activities, he said.