Surge In Consumer Spending Poised To Make 2021 A Record Year For Retail
Stimulus checks, warmer weather, loosening coronavirus pandemic restrictions and a brisk pace of Covid-19 vaccinations are all combining to spur a surge in consumer spending that might make 2021 a record-breaker.
In tracking consumer spending habits among those using Chase cards, JPMorgan found that March 2021 spending so far is on pace to be 23.9% higher than the same month a year ago. Though that month was affected by the onset of the pandemic, that still represents a surge that will likely continue as stimulus money courses through the economy.
A recent survey by UBS also found that households making more than $80K a year plan to increase their spending more than any other income bracket as the economy reopens. That will happen even without the help of stimulus money, which some upper-income households aren't getting anyway, Yahoo reports.
Those companies aren't alone in forecasting strong consumer spending this year. Pent-up demand and a return to more normal economic conditions are poised to drive retail sales and the overall economy at record speeds not seen in more than a generation, JLL predicts.
"We anticipate the fastest growth rate in GDP since 1984 and we expect consumers to fuel that drive," JLL said in a note published Tuesday. "Nominal retail and food services sales stand a good chance of setting a record for calendar-year growth and real retail and food services sales could reach the fastest calendar-year growth rate since demobilization at the end of World War II in 1946."
Last month, the National Retail Federation predicted in its annual forecast that U.S. retail sales will grow between 6.5% and 8.2% in 2021 to more than $4.33 trillion. Spurring the growth will be pent-up demand that online retailers won't be able to satisfy because, as more individuals are vaccinated against Covid-19 and the economy reopens, people will also want to go out.
That isn't to say that online sales will recede as the pandemic does. Online sales, which the NRF includes in its total projections, are expected to grow between 18% and 23% to between $1.14 trillion and $1.19 trillion this year, according to the organization.
More recently, the NRF predicted that spending for the Easter holiday on April 4 will be the highest on record. U.S. consumers plan to spend an average of $179.70 this year, the most ever, for a total of $21.6B, according to an annual survey released on Wednesday by the organization and Prosper Insights & Analytics.
“With new stimulus funds ... positive trends in vaccinations and growing consumer confidence, there is a lot of momentum heading into the spring and holiday events like Easter,” NRF President and CEO Matthew Shay said in a statement. “Many have figured out how to celebrate holidays safely with family and that is reflected in consumer spending this Easter.”
Consumer confidence shot up in March by 8% to the highest level so far this year, according to the University of Michigan’s most recent consumer survey, though that is still about 7% below pre-pandemic levels.