Second stimulus likely to boost retail spending, accelerate economic recovery, NRF says
Economic challenges spurred by the coronavirus will continue in 2021, though
The second round of economic impact payments is likely to boost retail spending and further "accelerate the nation’s ongoing recovery" despite all the uncertainty surrounding the pandemic, the National Retail Federation (NRF) said Monday.
Last month, Congress passed a $900 billion pandemic relief package that allocated an additional one-time $600 payment for individuals earning up to $75,000, or $150,000 for married couples. The legislation also included an additional $300 per week in unemployment benefits.
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As a result, NRF chief economist Jack Kleinhenz said, "we expect retail sales spending to see a boost from the new round of stimulus."
Women carry shopping bags on Dec. 10, 2020, in New York. (AP Photo/Mark Lennihan)
The trade group said the economic challenges spurred by the coronavirus pandemic will continue in 2021 and that "recoveries do not proceed in a straight line."
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While the "prospects for volatility over the next few months are high," Kleinhenz said that the new round of payments come "at a critical time that will help carry 2020’s momentum into 2021.”
The IRS started issuing those payments last week, meaning the funds have already hit many bank accounts across the nation.
According to NRF’s Monthly Economic Review, economic activity is likely to pick up by mid-2021 as COVID-19 vaccines continue to roll out and allow for more activities to resume.
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The vaccine began rolling out during the first quarter, which is "historically a soft spot" in the economy even without a global health crisis, according to the trade group. This means the timing "couldn’t be better," Kleinhenz said.
The economy is far from a full recovery, however. The NRF noted that it has made "considerable progress" during 2020.
For the first 11 months of the year, retail sales were up 6.6% compared to 2019. Meanwhile, the month of November saw an increase of 8.8%, further putting "the holiday season on track to meet the NRF’s forecast of between 3.6 percent and 5.2 percent growth."
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However, results for the full holiday season won't be released until Jan. 15, when the Census Bureau releases December’s numbers, the NRF said.