NRF Cautiously Optimistic in Holiday Retail Sales Forecast
Consumer spending has recovered from the coronavirus pandemic more quickly than expected, but forecasting 2020 holiday sales is like assembling a jigsaw puzzle without all the pieces, National Retail Federation (NRF) Chief Economist Jack Kleinhenz said in a press release from the trade association.
“I'm cautiously optimistic about the fourth quarter in terms of the economy and consumer spending, but the outlook is clouded with uncertainty pivoting on COVID-19 infection rates," Kleinhenz said, adding that the recession "appears to be behind us and the reopening of the economy over the past several months has created momentum that should carry through the fourth quarter. The test is whether consumer spending will be sustained amid wildcard puzzle pieces, including policy surprises, the election and a resurgent virus.”
Kleinhenz’s remarks came in the October issue of NRF’s Monthly Economic Review, which noted that consumer spending has seen a clear V-shaped recovery thanks in part to $1,200 stimulus checks issued this spring and enhanced benefits for the unemployed. However, both government programs have ended, only about half of the 22.2 million jobs lost in March and April have been replaced, and full economic recovery isn't likely before 2022, the report said. If there should be a second wave of COVID-19 and Congress fails to provide new fiscal support, there could be an “economic speedbump” resulting in slower spending growth or even a contraction in spending, Kleinhenz said.
Total Retail's Take: Despite the potential speedbumps that Kleinhenz identified, the NRF said that there's “solid evidence that signals a better-than-expected outcome” through the just-ended third quarter. Retail spending and housing have both recovered strongly, with home sales spurred by low interest rates boosting sales at home improvement, furniture and appliance retailers. Employment growth is slowing, but remains positive, and consumers have saved a portion of their stimulus checks and unemployment benefits. Consumer confidence remains below pre-pandemic levels, but is improving, with households upbeat about both current conditions and future expectations. The report also comes as NRF launched a marketing campaign last week, New Holiday Traditions, encouraging consumers to shop safe and shop early this year to avoid overcrowding stores and to take advantage of early holiday discounts.
- People:
- Jack Kleinhenz
