By Alan Wolf, YSN
Resident economic analyst Joe Higgins painted a celebratory business forecast for home goods retailers in an exclusive AVB webinar on Wednesday.
Higgins, a longtime Whirlpool exec and AVB keynoter, said every key economic indicator and trendline is pointing to a vibrant business climate this year and a consumer who’s ready and willing to spend.
“Your businesses have benefitted more than anybody else in America since the pandemic began,” he said of appliance, home furnishings and consumer tech dealers, “and I believe you’re going to see a similar year this year.”
Underlying Higgins’ projections is the curtailment of COVID-19. Based on the effectiveness of the vaccines and the stepped-up pace of their rollout, he believes “Our lives will get back to normal in the next few months.” Assuming the virus’s variants remain contained, that means Americans can safely return to theaters, restaurants, planes, schools, sporting events and other pursuits by the summer. That will jolt the economy with a powerful 4.1 percent increase in consumer spending, which could send GDP growth up by as much as 9.8 percent this year, he said.
Fueling that spree is the federal government’s new $1.9 trillion stimulus package. The preceding relief package, from December, added almost $2 trillion to household wealth in January, Higgins said, as well as a 20.5 percent increase in the consumer savings rate. “That means people have money to spend and they’ll spend it in your stores,” he noted. “Your businesses will have a very strong year.”
Adding to the glad tidings for BrandSource dealers is the adage that habits are hard to break. Despite pent-up demand for social activities, the cocooning patterns consumers developed during quarantine — home cooking, home entertainment and home improvement — will likely continue well past the pandemic. Higgins cited the CEO of Nautilus home fitness equipment, who projected that 20 percent of gym memberships will never be renewed, and the same statistic can apply to movie theaters and other destination activities.
Other positive signs include rising consumer confidence, strong retail sales, a robust housing market, falling unemployment, and plentiful and cheap credit, Higgins said.
But won’t the massive government outlays lead to inflation? Higgins dismissed that threat, and the impact of deepening federal deficits, as “boogeymen” that are no longer relevant in the America of today. The current macro economy, through oil independence, e-commerce and nimble offshore sourcing, is better geared to drive down costs and prices, he argued, which will assure a long runway of prosperity in the post-pandemic world.
“It’s going to be a very, very good year for your business,” he concluded.
Click here to view Higgins’ presentation in its entirety.