The National Retail Federation has issued its revised annual forecast for 2021, projecting that retail sales will grow between 10.5% and 13.5% to more than $4.44 trillion this year as the economy accelerates its pace of recovery.
The announcement was made during NRF’s inaugural State of Retail and the Consumer event, which was held on June 9 in Washington, D.C
“The economy and consumer spending have proven to be much more resilient than initially forecasted,” said NRF President Matthew Shay. “The combination of vaccine distribution, fiscal stimulus and private-sector ingenuity have put millions of Americans back to work.”
He added, “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 how essential small, mid-size and large retailers are to the everyday lives of Americans in communities nationwide.”
The revised forecast surpasses the federation’s initial projection of at least 6.5% growth, which was made back in February.
NRF notes that this initial forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus, prior to passage of the American Rescue Plan Act.
In the wake of all that has taken place since February, the federation now forecasts that retail sales this year are estimated to total between $4.44 trillion to $4.56 trillion.
Non-store and online sales, which are included in the total figure, are expected to grow between 18% and 23%, a range of $1.09 trillion to $1.13 trillion as consumers continue to utilize ecommerce. As usual, the NRF numbers exclude automobile dealers, gasoline stations and restaurants.
The updated figures compare with $4.02 trillion in total retail sales in 2020. Of that, $920 billion was from purchases made through both non-store and online channels.
In addition, NRF now projects that full-year Gross Domestic Product growth will approach 7%, compared with the 4.4% and 5% forecasted earlier this year. Pre-pandemic levels of output also are expected to return this quarter.
“We are seeing clear signs of a strong and resilient economy,” pointed out the federation’s Chief Economist, Jack Kleinhenz.
“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 also said the sheer amount of both fiscal and monetary policy intervention lifted personal income and filled the well of income that was lost in March and April of last year, serving to create an overabundance of purchasing power.
Given the strength of consumer spending, Kleinhenz noted he anticipates the fastest growth the U.S. has experienced since 1984. The reopening of the economy has accelerated much faster than most had believed possible even a year ago.
However, the NRF forecast doesn’t cover the negative impacts of inflation and supply chain delays plaguing the system. Some of these delays stem from the difficulty of manufacturers getting back up to speed because of a lack of workers and surging demand – factors that also have impacted third-party logistics providers, freight haulers and package delivery companies.