North American economy recovers, consumer purchasing power surges

The economy has come a long way from where it was a year ago, researchers said .

Jack Kleinhenz, chief economist at the National Retail Federation , said the U.S. economy has made great progress since the coronavirus pandemic brought activity to a near standstill last year, as vaccinations increase , new federal stimulus and consumers ' desire to shop again are whetted .

"The economy has come a long way from where it was a year ago. Monetary policy enacted by the Federal Reserve and fiscal policy enacted by Congress and the White House have worked with swift and overwhelming force to support the economy," Kleinhenz said . "The NRF is optimistic that the pace of recovery is gathering pace and that the necessary economic rebuilding is underway. Vaccination rates are rising, and recent data are encouraging for consumer spending . "

NRF's Monthly Economic Review report states that the situation has eased recently after the unpredictable impact of the epidemic led to widespread closures of retailers and other businesses starting in March 2020 .

This time a year ago, 22 million Americans lost their jobs in two months, the unemployment rate rose from a 50-year low of 3.5% to 14.7%, and economic output fell 31%, according to the NRF report .

But compared to last year, the Federal Reserve expects GDP to grow 6.5% this year and household net worth to hit a record high of $122.9 trillion.

Kleinhenz believes that the increase in net worth is due to rising home values ​​and consumers choosing to stay at home rather than go out to eat, travel or attend entertainment or sporting events, thereby accumulating savings. This wealth provides consumers with strong purchasing power, which is likely to be reflected in consumer-facing industries.

Kleinhenz said the new round of $1,400 stimulus checks now being distributed under the latest $1.9 trillion American Rescue Plan Act will certainly drive another leg of economic growth , though those funds will likely be split between spending, savings and paying down debt.

He also believes that while economic growth is stronger, the recovery is uneven . Although employment is continuing to grow, it is still weak overall , with about 10 million people still unemployed and an unemployment rate of 6.2% . Low-income workers and members of minority communities have been affected at different rates.

While some analysts have expressed concerns that rapid economic growth could lead to inflation, Kleinhenz said he agreed with Federal Reserve officials that price increases are unlikely to last . He added that supply will catch up with demand, the labor market is keeping wages in check and competitive e-commerce is limiting sellers’ pricing power .

North America

economy

consumer

Purchasing Power