The US is expected to have a booming holiday season despite supply chain obstacles, according to an expert.
"The economic data indicate that with jobs growth and maybe as much as 25% of the COVID stimulus still in people's bank accounts that it will be a booming holiday season," economist Ed Hirs told Anadolu Agency.
"The supply chain issues will serve to drive up prices but likely not dampen holiday spending overall," he said.
Although more than 22 million workers in the US lost jobs in March and April of 2020 due to the coronavirus pandemic, the number of unemployed fell to 7.7 million as of September, according to figures by the Labor Department.
The US has spent at least $5.2 trillion to fight the pandemic. The issuance of $1,400 stimulus checks to individuals in May brought payments to almost 167 million people at around $391 billion.
In addition, direct loans from the Paycheck Protection Program (PPP) provided $953 billion to help businesses and self-employed workers through the Coronavirus Aid, Relief, and Economic Security Act. Nearly 80% of PPP loans in 2020 have been fully or partially forgiven.
"The US economy is rebounding from the pandemic somewhat faster than those of its trading partners. This is happening because of the massive fiscal stimulus packages that transferred trillions of dollars to voters, easy monetary policy, and an aggressive vaccination campaign albeit one marred by political agendas," said Hirs, who teaches at the University of Houston.
"Consumers’ pent-up demand will likely be unleashed in the holiday season to stimulate further the US economy,” he said. “Some sectors such as hospitality and travel will continue to lag until the pandemic is more fully arrested.”
- Record sales expected
The holiday season traditionally starts around Thanksgiving in late November and lasts through Christmas and the New Year.
Sales in November and December have the potential to shatter previous records, the National Retail Federation (NRF) said Wednesday.
The world's largest retail trade association said it estimates holiday sales to grow between 8.5% and 10.5%, compared to last year -- climbing between $843.4 billion and $859 billion.
The projection, which excludes automobile dealers, gasoline stations and restaurants, is well above the previous high of 8.2% in 2020 and the average increase of 4.4% for the past five years, it added.
"There is considerable momentum heading into the holiday shopping season," NRF President and CEO Matthew Shay said in a statement. "Consumers are in a very favorable position going into the last few months of the year as income is rising and household balance sheets have never been stronger."
Despite recent issues in supply chains, Shay said retailers are making significant investments to ensure they have products on shelves to meet consumer demand.
- Online sales estimated more than $200 billion
NRF noted that it expects online and other non-store sales, which are included in its total projection, to increase between 11% and 15% to between $218.3 billion and $226.2 billion, driven by online purchases. Sales came at $196.7 billion in 2020.
"The outlook for the holiday season looks very bright," NRF Chief Economist Jack Kleinhenz said in the statement, adding households have increased spending vigorously throughout most of 2021 and they have plenty of holiday purchasing power.
"Pandemic-related supply chain disruptions have caused shortages of merchandise and most of this year’s inflationary pressure," said Kleinhenz, but noted that inventories may be pulled down sooner and shortages may develop in the later weeks of the shopping season.
"However, if retailers can keep merchandise on the shelves and merchandise arrives before Christmas, it could be a stellar holiday sales season," he added.
NRF expects retailers to hire between 500,000 and 665,000 seasonal workers, up from 486,000 seasonal hires in 2020.
Some hiring may have been pulled into October as retailers encouraged households to shop early to avoid a lack of inventory and shipping delays, the association noted.