Despite falling consumer confidence numbers amid the recent rise in Covid-19 infections, shoppers are continuing to spend, National Retail Federation (NRF) Chief Economist Jack Kleinhenz said.<\/p>\n\n\n\n
\u201cWith consumer spending accounting for roughly two-thirds of US gross domestic product, all eyes are closely watching shoppers\u2019 ability to drive the economy,\u201d Kleinhenz said. \u201cIf consumer finances are any indication, there\u2019s reason to be optimistic: Households remain in good shape, with consumers in the aggregate actually underspending relative to current income. Even though enhanced unemployment benefits have expired and are no longer providing a boost to personal income, the loss is easily offset by the savings stockpiled since the coronavirus pandemic began.\u201d<\/p>\n\n\n\n
Kleinhenz\u2019s remarks came in the October issue of NRF\u2019s Monthly Economic Review<\/em>, which noted that consumers\u2019 mid-summer savings rate of 9.6% was noticeably above pre-pandemic levels and that income growth going forward should benefit from expected strong employment gains and higher wages while Child Tax Credit checks being issued through December will also provide a bump.<\/p>\n\n\n\n The report comes as Covid-19 has returned as a \u201cmajor impediment\u201d to consumer confidence because of the delta variant. The seven-day average of both new cases and deaths reported by the Centers for Disease Control and Prevention soared from pandemic lows in early summer to six-month highs in September and remain high despite tapering off. The Federal Reserve attributed a deceleration in economic growth in late summer to a pullback in dining out, travel and tourism as the spread of the virus made the public more cautious. The impact was seen in August when payrolls rose by only 235,000 jobs nationwide, down from a gain of 1.1 million the month before.<\/p>\n\n\n\n In mid-September, the Fed lowered its forecast for gross domestic product growth for the year to 5.9 percent from 7 percent, and the agency expects unemployment to end the year at 4.8 percent rather than 4.4 percent. Inflation as measured by the Consumer Price Index was up 5.2 percent year-over-year in August, fuelled by consumer demand and supply chain disruptions, and a Fed survey found consumers expect an equal amount of growth over the next 12 months. Amid those numbers, the University of Michigan Index of Consumer Sentiment fell to 71 in September, far below its pandemic high of 88.3 in April and the lowest confidence level since the beginning of the pandemic.<\/p>\n\n\n\n Despite all that, August retail sales as calculated by NRF rose sharply, up 2.3% month-over-month and 12% year-over-year. That brought the first eight months of the year to a 15% year-over-year gain and on track to meet NRF\u2019s forecast of between 10.5 and 13.5% growth for the full year. \u201cThat strong momentum shows there\u2019s a big disconnect between consumer confidence and consumer spending at the moment and that the downdraft in confidence may well be a false scent,\u201d Kleinhenz said. \u201cThere\u2019s a saying that you should never underestimate the American consumer \u2013 and its corollary is that you should watch what consumers do, not what they say.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Despite falling consumer confidence numbers amid the recent rise in Covid-19 infections, shoppers are continuing to spend, National Retail Federation (NRF) Chief Economist Jack Kleinhenz said. \u201cWith consumer spending accounting for roughly two-thirds of US gross domestic product, all eyes are closely watching shoppers\u2019 ability to drive the economy,\u201d Kleinhenz said. \u201cIf consumer finances are…<\/p>\n","protected":false},"author":1,"featured_media":11931,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[83],"tags":[],"thb-sponsors":[],"class_list":["post-11930","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bulletin"],"acf":[],"yoast_head":"\n