NRF Raises 2021 Retail Sales Forecast

Washington—The National Retail Federation upped its annual retail sales forecast for the year, encouraged by the vaccine rollout and the resiliency of consumer spending.

Retail sales (excluding automobiles, gas stations and restaurants) are now expected to grow between 10.5 and 13.5 percent year-over-year to more than $4.44 trillion. 

Previously, NRF forecast sales growth of 6.5-8.2 percent to between $4.33 trillion and $4.4 trillion.

“The economy and consumer spending have proven to be much more resilient than initially forecasted,” said NRF President and CEO Matthew Shay in a press release about the updated forecast.

“The combination of vaccine distribution, fiscal stimulus and private sector ingenuity have put millions of Americans back to work. While there are downside risks related to worker shortages, an overheating economy, tax increases and over-regulation, overall households are healthier, and consumers are demonstrating their ability and willingness to spend.” 

"Consumers are increasingly confident and we're seeing them demonstrate their ability and their willingness to spend money and drive our economy. As a result, today we're revising our annual spending forecast."
— NRF President and CEO Matthew Shay https://t.co/J0W8qmVbo4 pic.twitter.com/jPw08OG5Wl
— National Retail Federation (@NRFnews) June 9, 2021
 

The NRF noted it made its initial forecast in February when there was still “great uncertainty” about consumer spending, the vaccine rollout, virus infection rates, and whether or not there would be additional fiscal stimulus.

The trade organization announced the updated forecast during its first “State of Retail and the Consumer” event, held virtually last week. 

As more consumers embrace e-commerce, non-store and online sales, which are included in the total figure, are expected to grow between 18 percent and 23 percent to between $1.09 trillion and $1.13 trillion.

In 2020, the NRF reported $4.02 trillion in total retail sales, with non-store and online sales accounting for $920 billion of that total.

For 2021, the NRF is forecasting full-year GDP growth of 7 percent, up from the 4.4-5 percent predicted earlier this year.

Pre-pandemic output levels are expected to return in this quarter, the organization said.

“We are seeing clear signs of a strong and resilient economy,” said NRF Chief Economist Jack Kleinhenz.

Fiscal and monetary policy intervention, like the stimulus checks, bolstered personal income and somewhat made up for the income lost last March and April, he said, which increased consumers’ purchasing power.

The data points to “an energetic expansion over the upcoming months and through the remainder of the year,” Kleinhenz said.

The economy reopened faster than many expected, he said, adding that he foresees the fastest growth the United States has experienced since 1984.

“There will likely be some spending shifted away from goods toward services, but the retail industry has greatly benefited from this acceleration of spending,” said Kleinhenz during the presentation.

The possibility of people spending less on goods, particularly luxury goods, as opportunities for travel, dining and other experiences open up has been a point of discussion in the jewelry industry as of late. 

On its recent earnings call, Signet Jewelers noted this possible shift away from jewelry and other goods to experience-based categories, but said it will ramp up its marketing efforts in response.

To watch the recorded session, visit the NRF’s website.