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The Kiplinger Letter expects a big jump in consumer spending as more U.S. citizens are vaccinated against COVID-19. There is a pent up demand for services that many consumers have had to do without for the past year. People are also sitting on large amounts of cash after saving for months money that would have normally been spent. It’s estimated that an extra $1.6 trillion is stashed in savings accounts. It’s likely that the boom in services will fire up in April, even as vaccinations are still rolling out across the country.
People that held onto their jobs during the pandemic will start to splurge again on things like high-end restaurants, vacations, and elective surgeries. People will even start going to the movies again, as many are tired of bingeing on Netflix and Amazon Prime.
The additional money being spent on services will mean fewer dollars will be spent on goods.
The surge in spending on electronics in 2020 will taper off. Grocery stores will also see a decrease in revenues as people begin to go out to eat more regularly. Car sales should level off, although they will continue to be strong in 2021. Real estate sales will still be strong given low interest rates and the surge of people looking for low density housing. Robust sales related to home improvements will be prolonged as many people are still working from home. Clothing sales should improve for the business casual segment. As people start returning to the workplace, they will have to retire their sweats for something a little spiffier.
Learn more about the Kiplinger forecasts at https://www.kiplinger.com/economic-forecasts.
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