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NRF: Holiday season may deal a few wild cards

Washington – The National Retail Federation’s (NRF) chief economist is mostly optimistic about 2020 holiday sales, with a few caveats.

In NRF’s Monthly Economic Review, Jack Kleinhenz likened the job of forecasting the organization’s holiday outlook to assembling a jigsaw puzzle without all the pieces.

“Completing a puzzle is highly probable given patience, having all the pieces and having the picture on the box to guide assembly,” Kleinhenz said. “But it’s not the same when attempting to fit pieces of the economy together in today’s environment. Many of the pieces are missing.”

The overall economy and consumer spending levels show encouraging signs that should carry through the fourth quarter, he said, but COVID-19 infection rates create uncertainty.

“The test is whether consumer spending will be sustained amid wildcard puzzle pieces including policy surprises, the election and a resurgent virus.”

The government’s $1,200 stimulus checks issued this past spring and enhanced benefits for the unemployed helped boost spending, he noted. Both are now in the rearview mirror, and only about half of the 22.2 million jobs lost in March and April have been replaced. Full economic recovery is not likely before 2022, he said in the report.

If there should be a second wave of COVID-19 and Congress fails to provide new fiscal support, there could be an “economic speedbump” resulting in slower spending growth or even a contraction in spending, Kleinhenz said.

Despite that warning, there is “solid evidence that signals a better-than-expected outcome” through the just-ended third quarter. Retail spending and housing have both recovered strongly, with home sales spurred by low interest rates boosting sales at home improvement, furniture and appliance retailers.”

Although employment growth is slowing it remains positive, and consumers have saved a portion of their stimulus checks and unemployment benefits. Consumer confidence remains below pre-pandemic levels but is improving, with households upbeat about both current conditions and future expectations.


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