Shoppers wear protective masks at the Glendale Galleria mall in Glendale, California on Thursday, May 6, 2021.
Bing Guan | Bloomberg | Getty Images
One of the country’s largest retailers, the National Retail Federation, on Wednesday raised the industry’s outlook for the year, saying it expected “the fastest growth we’ve seen in this country since 1984”.
Retail sales are projected to grow between 10.5% and 13.5% to an estimated $ 4.44-4.56 trillion in 2021 as the economy recovers from the coronavirus pandemic and customers spend money it have put away, said the chief economist of the NRF, Jack Kleinhenz, said at a virtual event. This forecast includes store and online sales, but excludes car dealerships, gas stations, and restaurants.
This compares with total retail sales of $ 4.02 trillion in 2020 and $ 3.76 trillion in 2019.
The industry group had forecast in February that retail sales would increase between 6.5% and 8.2%, which corresponds to annual sales of more than 4.33 trillion US dollars.
The NRF also raised its forecast for full-year GDP growth to around 7%, compared to the 4.4-5% it expected earlier this year. It said it expected pre-pandemic production levels to return this fiscal quarter.
Kleinhenz said the state incentives have flowed through the economy and into consumer wallets. That has fueled buyers’ appetite for spending and a faster recovery than expected, he said.
“We are seeing clear signs of a strong and resilient economy,” he said, adding that households are “ready to resume some normalcy of life, work and play.”
Despite the rosy outlook, the retail sector continues to face challenges including inflation, congested ports and labor shortages. US retail sales stalled in April after rising 10.7% in March, according to the Department of Commerce. Retail sales for May have not yet been announced.
It is also unclear how much consumer wallets are being shifted towards services and other spending priorities such as hotel accommodation, airline tickets and restaurants rather than consumer goods.
Many retailers, including Walmart, Levi’s, and Macy’s, recently reported strong first quarters and raised their own forecasts for the year. Business leaders have said they see consumers leaving the house, planning social gatherings, and trading in their loungewear for jeans and dresses.
Macy’s CEO Jeff Gennette said on a conference call in May that the company believes “backlogged demand opportunities” remain as shoppers purchase luggage, shoes, new outfits and makeup.
“We don’t see this as short-term pop,” he said.