WASHINGTON — Citing an accelerating economic recovery, the National Retail Federation (NRF) has raised its retail sales forecast for 2021. The nation’s largest retail trade organization now projects that retail sales will grow between 10.5% and 13.5%, up from its February forecast of 6.5% to 8% growth.
“The economy and consumer spending have proven to be much more resilient than initially forecast,” said Mathew Shay, NRF president and chief executive officer. “The combination of vaccine distribution, fiscal stimulus and private-sector ingenuity have put millions of Americans back to work. While there are downside risks related to worker shortages, an overheating economy, tax increases and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend. The pandemic was a reminder of how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.”
NRF’s original projection was made when there was still considerable uncertainty about consumer spending, vaccine distribution, coronavirus infection rates and additional fiscal stimulus prior to passage of the American Rescue Plan Act. Based on the revised growth rate projections, retail sales this year should total between $4.44 trillion and $4.56 trillion, up from $4.02 trillion in 2020.
E-commerce is expected to continue its dramatic expansion. Non-store and online sales, which are included in the revised figures, are forecast to increase between 18% and 23%, to a range of $1.09 trillion to $1.13 trillion. Last year non-store and online sales totaled $920 billion, according to NRF. The totals are based on the Census Bureau’s revisions and adjustments released on April 26, but do not include automobile dealers, gasoline stations and restaurants.
In line with its revised retail sales projection, NRF has also bumped up its forecast for gross domestic product (GDP) growth to nearly 7%, compared with an earlier prediction of 4.4% to 5% growth. It expects output to return to pre-pandemic levels during the current quarter.
“We are seeing clear signs of a strong and resilient economy,” said Jack Kleinhenz, NRF’s chief economist. “Incoming data suggests that U.S. economic activity continues to expand rapidly, and we have seen impressive growth. Most indicators point toward an energetic expansion over the upcoming months and through the remainder of the year.”
Kleinhenz pointed out that massive fiscal and monetary policy intervention by the federal government has lifted personal income, more than compensating for the income that was lost in March and April of last year, when roughly 20 million jobs were lost. Consequently, consumer spending and the recovery have rebounded more rapidly than expected.
The revised forecast was unveiled during NRF’s inaugural State of Retail and the Consumer event, and Kleinhenz offered some additional perspective.
“We are anticipating the fastest growth that we’ve seen in this country since 1984,” he said. “It takes a lot to reopen a $20 trillion economy but, in many ways, it’s accelerated much faster than most of us had believed possible. There will likely be some shifting of spending away from goods toward services, but the retail industry has greatly benefited from this acceleration of spending.”
During the event Shay paid tribute to the industry’s ability to pivot in response to shifts in consumer behavior and its readiness to make major investments to adapt to those shifts.
“In the past decade, retailers have invested literally billions of dollars to adapt their businesses to changing consumer behavior,” he said.