Growth of 6.5% and 8.2% predicted for current year
WASHINGTON – The National Retail Federation said Wednesday that it expects U.S. retail sales to grow between 6.5% and 8.2% this year, topping $4.33 trillion, as more Americans get vaccinated and the economy reopens.
“Despite the continuing health and economic challenges COVID-19 presents, we are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” NRF President and CEO Matthew Shay said. “From the outset of the pandemic, retailers have gone above and beyond even the most conservative safety guidelines to protect and serve their associates and consumers alike. Retailers are increasingly engaged in working with federal, state and local health officials to distribute and administer the vaccine. This partnership has been key to our economic health throughout the pandemic and will continue this year.”
Early results show that retail sales in 2020 grew 6.7% over 2019 to $4.06 trillion, nearly doubling NRF’s forecast of at least 3.5% growth, which did not account for the impact of a global pandemic. This figure compares with 3.9% growth in 2019. Online and other non-store sales, which are included in the total figure, skyrocketed to 21.9%t at $969.4 billion as consumers shifted to e-commerce. The numbers exclude automobile dealers, gasoline stations and restaurants.
The November-December holiday season accounted for nearly one-fifth (19.4%) of overall 2020 retail sales, according to NRF, which notes that retail sales during the holiday period grew an unexpectedly high 8% to $787.1 billion. Non-store and other online sales represented $206.9 billion of total holiday sales, up 22.6% over the year before.
NRF forecasts that 2021 retail sales will total between $4.33 trillion and $4.4 trillion. Online sales, which are included in the total, are expected to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion.
NRF expects the overall economy to gain between 220,000 and 300,000 jobs per month in 2021, depending on the pace of the overall economy in the second and third quarters. Despite the economy’s stalled momentum at the end of last year, NRF forecasts real GDP growth between 4.5% and 5%.
“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” NRF Chief Economist Jack Kleinhenz said. “Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year. The economy is expected to see its fastest growth in over two decades.”
Kleinhenz noted that this year marks the second year of savings, record-high stock valuations, increased home prices, enhanced government support, and record low interest rates, all of which are factors affecting the economy and consumer spending behavior.
Households will still consume retail goods but will turn to services as they are able, which normally account for 70% of consumer spending, Kleinhenz added. While the pandemic has precipitated broader adoption of multichannel services for the retail industry, households are becoming attached to the convenience and product selection of buying online.
NRF noted that its forecast for 2021 is based on economic conditions that are subject to change. NRF will update its estimates accordingly.