The National Retail Federation's (NRF) chief economist Jack Kleinhenz said yesterday that the U.S. economy could see its fastest growth in more than three decades.
“While there's 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 behaviors like shopping, travel, and family gatherings,” Kleinhenz said in the May issue of NRF’s Monthly Economic Review. “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.”
The NRF expects the U.S. economy to grow 6.6 percent this year, the highest level since 7.2 percent in 1984. Consumers’ “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 Americans going back into the office and school, Kleinhenz said.
Total Retail's Take: It's not just the NRF that's forecasting an economy on the fast track. The NRF's Monthly Economic Review also quoted the latest edition of the Federal Reserve’s Beige Book, which publishes anecdotal information on current economic conditions eight times a year. The Book, the NRF said, "affirms what the economic data has been signaling: U.S. growth is beginning to accelerate.” Indeed, the Book said consumer spending improved across the country after Washington sent out $1,400 stimulus checks to most Americans. What also helped, the Fed said, was an increase in hiring that put more people back to work and boosted incomes. The U.S. added more than 900,000 new jobs in March.
The Fed assessment and other data show unemployment benefits and tax refunds have provided an increase in personal income and purchasing power. As a result, consumers are “sitting on a stockpile of cash” that could become “a spring-loaded spending mechanism,” noted Kleinhenz.