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NRF Revises Forecast

NRF Revises Forecast as Great Uncertainty Transforms Into Recovery

Jack Kleinhenz
Jack Kleinhenz, NRF chief economist

As retailers head into the second half of 2021, National Retail Federation (NRF) chief economist Jack Kleinhenz says the great uncertainty clouding the nation’s economic outlook earlier in the year has transformed into evidence of a recovery from the COVID-19 pandemic.

“It has become clear that the U.S. economy and retail sales are growing far faster and more steadily than anyone could have expected just a few months ago,” Kleinhenz says. “We are seeing not just unprecedented growth from months of pent-up demand as the economy reopens but momentum as well.”

Kleinhenz’s remarks came in the July issue of the NRF’s Monthly Economic Review. As part of its inaugural State of Retail and the Consumer event in June, the NRF issued a revised forecast, expecting sales to grow between 10.5 and 13.5 percent above 2020 sales.

“Our initial forecast was made when there was still great uncertainty about consumer spending, vaccine distribution, virus infection rates and additional fiscal stimulus,” Kleinhenz says. “Since then, we have seen spending grow, vaccines have become available to virtually anyone who wants one, infections have fallen and additional stimulus in the form of the American Rescue Plan has been signed into law.”

Since February, economic data has come in that makes it clear the initial forecast would be exceeded. Numbers for the first five months of the year showed retail sales tracking 17.6 percent above the same period in 2020. In addition, sales have grown year-over-year every month since June 2020. In May, the $388.6 billion in sales was the second-highest level on record, exceeded only by the $414.7 billion during the height of the holiday season in December 2020.

“As the pandemic illustrated so vividly in 2020, we should expect the unexpected,” Kleinhenz says. “But based on the data at hand, things are looking very good for the economy and consumers, and we think it was prudent to update our forecast given the brightening picture.”

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