THE SHOP

January '21

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6 THE SHOP JANUARY 2021 R elief is in sight. Battered by the pandemic and scrambling to shore up finances, retailers can look forward to an easing of the pain over the next 12 months. Economists anticipate a gradual, but noticeable, recovery fueled by a strong housing market, a surge in corporate profits and the successful rollout of a coronavirus vaccine. It may have to come after short- term late-2020 economic dips caused by tightened social restrictions due to rising fall and winter infection rates, but insiders say it will come. "The COVID-19 recession is over, and the economy is currently in an early-cycle expansion," Sophia Koropeckyj, managing director of industry economics at Moody's Analytics, a research firm based in West Chester, Pennsylvania, (economy.com) reported in early November. As such, retailers were predicted to see notable gains over the next 12 months. "Our current 2021 forecast is for 6.2% growth in core retail sales," says Scott Hoyt, senior director of consumer economics for Moody's Analytics. Such a performance would be a substan- tial improvement over 2020, when the esti- mated 2.1% increase at the end of the year will reflect a deceleration from the 3.9% growth of 2019. (Core retail sales exclude the volatile auto and gasoline segments.) REASONS FOR OPTIMISM The healthier the economy, the greater the potential for wage increases that can fuel retail sales. Moody's expects the nation's Gross Domestic Product (GDP) to increase at a 4% clip for 2021—a welcome rebound from the previous year's decline, expected to come in at 4% when figures are finally tallied. (The GDP, the total of the nation's goods and services, is the most commonly accepted measure of economic growth.) And, after a contentious election cycle, the Joe Biden presidential win should sup- port an economic rebound in three areas. "Biden has proposed significantly more fiscal stimuli, which will pack a punch in the coming year as aggregate demand is still recovering from the pandemic," says Koro- peckyj. "Second, Biden likely will not resume Trump's tariff wars with China, which have acted as a tax increase for consumers. Finally, Biden will liberalize international immigra- tion, which will boost the supply of labor and, in turn, the economy's potential." Will it be a return to normalcy? RETAIL FORECAST By Phillip M. Perry Retailers can look forward to an increasingly favorable operating environment in 2021 as the economy gradually rebounds from the effects of the COVID-19 pandemic.

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