With more businesses reopening and bringing employees back to work, the US economy is on firm footing and could see its fastest growth in more than three decades, according to the latest issue of National Retail Federation’s (NRF) Monthly Economic Review. It expects the economy to grow 6.6 per cent this year, the highest level since 7.2 per cent in 1984.
“The consumer is nearly always the key driver in the economy, and with the consumer in good financial health, a sharp demand is expected to unfold over the coming months,” said NRF’s chief economist Jack Kleinhenz.
“While there is a great deal of uncertainty about how fast and far this economy will grow in 2021, surveys show an increase in individuals being vaccinated, more willingness to receive a vaccination, increased spending intentions and comfort with resuming pre-pandemic behaviours like shopping, travel and family gatherings,” Kleinhenz said. “This feel-better situation will likely translate into higher levels of household spending, especially around upcoming holidays like the Fourth of July and spending associated with back-to-work and back-to-school.”
Among other favourable indicators, the $2.4 trillion saved by households during February alone was approximately twice the average monthly savings during pre-pandemic 2019 and comes on top of savings accumulated over the past year as consumers stayed home rather than dining out, traveling or attending sports and entertainment events, the report said.
In addition, use of consumer credit is up, with outstanding credit surging in February to its highest level since late 2017. The increase in borrowing “highlights a consumer who is growing more confident as the economy accelerates, job growth picks up and more states lift burdensome restrictions,” Kleinhenz said.
NRF has revised its numbers according to the Census Bureau, which recently released its annual revision of retail sales. It now shows 2020 retail sales of $4.02 trillion rather than the $4.06 trillion originally reported. But 2020 grew 6.9 per cent over 2019 rather than 6.7 per cent because 2019 was revised down to $3.76 trillion from $3.81 trillion, the report noted.
Sales in 2020 broke the previous record of 6.3 per cent set in 2004 despite the pandemic. NRF has forecast that 2021 retail sales will grow between 6.5 per cent and 8.2 per cent over 2020 to between $4.33 trillion and $4.4 trillion.