US Economy Could See Fastest Growth Since the ‘80s

Washington—The U.S. economy could see its fastest growth in more than three decades amid business reopenings, employees returning to work, and increased consumer confidence, the National Retail Federation said.

In its May issue of the Monthly Economic Review, the NRF said it expects the economy to grow 6.6 percent this year, its most aggressive growth since 1984, when the economy expanded 7.2 percent.

“While there is a great deal of uncertainty about how fast and far this economy will grow in 2021, surveys show an increase in individuals being vaccinated … increased spending intentions and comfort with resuming pre-pandemic behaviors like shopping, travel and family gatherings,” NRF Chief Economist Jack Kleinhenz said.

“This ‘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 back-to-work and back-to-school.”

The NRF Review said the latest edition of the Federal Reserve’s Beige Book, a report on current economic conditions, “affirms what the economic data has been signaling”—U.S.  growth is starting to accelerate. 

Both the Federal Reserve’s assessment and other data show unemployment benefits, government stimulus checks, and tax refunds have provided a major increase in personal income and purchasing power, with consumers “sitting on a stockpile of cash” that could become “a spring-loaded spending mechanism,” Kleinhenz said.

The NRF said the $2.4 trillion saved by households in February alone was about twice the average monthly savings in 2019 and is in addition to savings accumulated over the past year as consumers stayed at home instead of dining out, traveling, or attending entertainment and sporting events. 

Additionally, use of consumer credit is up, with outstanding credit in February surging to the highest it’s been since late 2017, according to NRF. 

Kleinhenz said the increase in borrowing “highlights a consumer who is growing more confident as the economy accelerates, job growth picks up, and more states lift burdensome restrictions.”

He did caution that last year’s “outsize swings” in economic data brought on by the pandemic, hurricanes, wildfires, and other events would make year-over-year comparisons difficult throughout 2021. He said federal agencies are trying their best with available information to make seasonal adjustments account for the swings. 

NRF has revised its retail sales (excluding autos, gas, and restaurants) total for 2020 to $4.02 trillion rather than the $4.06 trillion originally reported. 

Growth last year, however, was adjusted upward to 6.9 percent since 2019 retail sales were revised to $3.76 trillion from $3.81 trillion, which means 2020 still broke the record for retail sales growth despite the pandemic.

NRF has forecasted 2021 retail sales will grow between 6.5 percent and 8.2 percent year-over-year to between $4.33 trillion and $4.4 trillion.