National Retail Federation Chief Economist Jack Kleinhenz said blockbuster holiday season retail sales in the final two months of last year illustrated the rebounding economy but were also helped by consumer emotions following a stressful 2020, according to an announcement.
Kleinhenz said a “push and pull” existed between the excitement during the holidays and concerns regarding a rebound in coronavirus infections. However, government stimulus checks obtained earlier in 2020 and funds not spent on travel, restaurants or going to entertainment events increased the capacity for consumers to spend.
Furthermore, increasing home values and stock prices offered support for spending over the holidays and the availability of coronavirus vaccines helped lessen concerns regarding the virus and state limitations on activity. Even so, millions of people in the U.S. were jobless or not working as many hours.
“This was not a typical holiday season and it took place amid an unprecedented shopping landscape,” Kleinhenz said in the announcement. “When we assembled our 2020 holiday forecast, we knew one scenario was that results could come in high and that sales might exceed the forecast.”
Kleinhenz also made note of the observation by famed economist John Maynard Keynes that “animal spirits” can dictate consumer behavior instead of rational motivation.
His comments were part of the National Retail Federation’s Monthly Economic Review for its February edition, which noted that last year’s $789.4 billion in holiday spending over December and November represented an all-time high even with COVID-19.
The news comes as Kleinhenz indicated that the American economy should witness a meaningful economic recovery this year as vaccines combat COVID-19 and fresh government stimulus kicks in.
Even so, the economist doesn’t foresee that U.S. economic growth will go back to pre-pandemic levels until late this year, while the jobless rate might stay elevated up to 2023 at the latest.
“The pace of the economic recovery is expected to pick up after the winter months and into mid-year, and it is likely that we will see a reacceleration of gross domestic product and jobs leaning into a meaningful economic recovery,” Kleinhenz said in the federation’s January economic review.