U.S. retail sales to rise 6.5% to 8.2% in 2021, as Covid vaccine triggers fastest economic growth in over two decades, NRF says
Customers wearing protective masks exit a Uniqlo store in San Francisco, California, on Wednesday, Feb. 17, 2021.
David Paul Morris | Bloomberg | Getty Images
Retail sales are expected to grow this year between 6.5% and 8.2%, amounting to more than $4.33 trillion in sales, as the U.S. economy begins to reopen, and more and more individuals receive the Covid vaccine, the National Retail Federation said Wednesday.
A preliminary reading shows that retail sales grew 6.7% to $4.06 trillion last year, the industry’s leading trade group said, despite the health and economic challenges sparked by the pandemic. That was largely boosted by nearly 22% growth online.
Over the course of the year, more Americans have turned to websites and apps to buy groceries, comfortable clothing and home goods. The numbers exclude automobile dealers, gasoline stations and restaurants.
This year, NRF is forecasting e-commerce sales will grow between 18% and 23%, to between $1.14 trillion and $1.19 trillion in sales. This growth is included in NRF’s total retail sales projection.
“The trajectory of the economy is predicated on the effectiveness of the vaccine and its distribution,” NRF Chief Economist Jack Kleinhenz said in a statement.
“Our principal assumption is that that the vaccination will be effective and permits accelerated growth during the mid-year,” he said. “The economy is expected to see its fastest growth in over two decades.”
Kleinhenz added that this year is already shaping up to see continued savings by consumers, record-high stock valuations, escalating home prices and record-low interest rates, all of which are contributing factors toward NRF’s projections for a robust economic rebound.
The trade group further expects that as Americans become more comfortable traveling again and attending social gatherings, more money will be spent on services, which normally account for 70% of consumer spending.
“We are very optimistic that healthy consumer fundamentals, pent-up demand and widespread distribution of the vaccine will generate increased economic growth, retail sales and consumer spending,” NRF President and CEO Matthew Shay said.
Some retailers have started to offer a glimpse into their expectations for the year. But these forecasts are often tinged with lingering uncertainty.
Macy’s, for example, has said this year will be one for recovery and rebuilding, after it suffered steep sales declines in 2020. But it doesn’t yet factor into its expectations any rebound in international tourism.
Home Depot, which has benefitted from robust growth as more Americans invest in their homes during the pandemic, did not offer a full-year outlook when it reported earnings earlier in the week. CFO Richard McPhail said that the retailer is not sure how long the pandemic will last, and how that may influence consumer spending.
