Retail Sales Growth in 2021 Depends on Vaccines, Says NRF

Washington, D.C.—The National Retail Federation’s annual forecast called for a strong year ahead as the vaccine rollout continues.

Retail sales are expected to grow between 6.5 percent and 8.2 percent to more than $4.33 trillion in 2021.

In a media call about the results, CEO Matthew Shay said the U.S. hasn’t seen this level of sales growth since 2004, noting the average growth has been 4.5 percent over the past five years.

Retail sales grew 6.7 percent year-over-year in 2020 and 3.9 percent in 2019.

“We continue to be optimistic that in the aggregate, macroeconomic conditions are very healthy and will continue to improve,” said Shay.

Online sales in 2021 are expected to grow between 18 percent and 23 percent to between $1.14 trillion and $1.19 trillion.

The NRF expects to see job gains between 220,000 and 300,000 jobs per month while GDP growth is expected to be between 4.5 and 5 percent.

“This forecast is a snapshot based on the current economic environment,” cautioned Shay, as some uncertainty remains.

NRF Chief Economist Jack Kleinhenz noted the economy’s trajectory is dependent on the effectiveness of the vaccine and its distribution.

The worst-case scenario, said Kleinhenz on the call, includes mutations of the virus or a vaccine that is ineffective.

Presuming that vaccination efforts are successful, Kleinhenz expects the economy to see its fastest growth in more than two decades.

Kleinhenz highlighted several factors to back up the NRF’s optimism, including a second year of “extraordinary savings,” record high stock valuations, increasing home prices, and low interest rates.

Stimulus checks have been especially helpful in boosting consumer spending, he said, particularly for the unemployed and the lower and middle classes.

“The consumer certainly has purchasing power and is willing to spend and we believe that’s going to be important,” said Kleinhenz.

The more affluent consumers have not been spending as much in comparison, he said.

About one-third of stimulus dollars go toward spending with another one-third going to savings and the remaining one-third paying down debt, noted Kleinhenz.

Retailers have benefited from a shift to goods from services over the last nine to 10 months, but the pendulum may swing in the other direction going forward, he said.

As life returns closer to normal, Kleinhenz said consumers will still spend on retail goods, but will spend on services as well, which accounts for 70 percent of consumer spending.