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Consumers Planning 9% Higher Spend on Clothing and Shoes This Summer

If you ask American businesses and consumers, things are looking up.

New surveys offer a glimpse into the near-term economic outlook, according to corporate executives bracing for robust revenue and profit growth and consumers ready and willing to spend.

For starters, 70 percent of the 770 certified public accountants surveyed for the Association of International Certified Professional Accountants (AICPA) Economic Outlook Survey’s Q2 update are upbeat about the economy over the coming 12 months, up from just 47 percent in the prior quarter. The executives, including CEOs, chief financial officers and corporate controllers, expect growth in revenue and profits not seen since 2018, according to the survey, which AICPA fielded between April 27-May 24 this year. The sentiment mirrors the National Retail Federation’s estimate of up to 8.2 percent annual retail sales growth this year.

Government stimulus coupled with growing vaccination rates and capacity-restriction rollbacks all converged to bolster business conditions, executives noted. It’s the “first time a majority of executives have held a positive sentiment on the economy since the pandemic began in the first quarter last year, and it’s the highest level that measure has reached since the second quarter of 2018,” AICPA added.

The survey group expects 4 percent growth in the year ahead, more than doubling last quarter’s 1.9 percent forecast. Revenue growth is projected at 5 percent, up from the previous 3 percent estimate. Both figures mark their highest levels since 2018.

Respondents are increasingly optimistic about their own companies’ fortunes for the next 12 months, with 76 percent feeling positive about the outlook versus 58 percent in the prior quarter. What’s more, expansion plans are on the horizon for 69 percent in the year ahead, up 11 percent from Q1. One-third of executives said they’re planning to immediately fill open positions, a 14 percent quarterly bump signaling a strengthening jobs market.

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“What we’re seeing is a broad expectation that things will really open up in the second half of the year,” said Ash Noah, a CPA and vice president and managing director who heads up learning, education and development for AICPA. However, supply chains are still straining to satisfy demand, a reality seen weighing on the near-term outlook, he added. Executives’ growing confidence suggests the pandemic’s worst might be in the rearview mirror, despite lingering uncertainties about the coronavirus outbreak, Noah said.

Corporate leaders are well aware of the challenges that lie ahead, regardless of their overarchingly positive sentiments around an economic recovery. Most bemoaned the struggle of hiring skilled personnel, ahead of ongoing problems with sourcing “materials, supplies, equipment costs” and questions around political leadership. Companies expect input prices to climb 4.4 percent in the next 12 months, higher than the 3.1 percent bump projected in the prior quarter. On top of that, surveyed executives looking at the 12 months ahead expect their companies to raise prices by 2.7 percent instead of 1.8 percent hike predicted in Q1.

The CAP Outlook Index included in the AICPA poll broadly gauges executive sentiment, and at 78 marks a 10-point uptick from the previous quarter. Each of the index’s nine components is now up at least six points over Q1.

Separately, Pitney Bowes’ latest BOXpoll finds Americans primed and planning to spend this summer, regardless of their vaccination status. Gen Z and millennial consumers are leading the charge, with a 9 percent spending increase seen across all demographics in all categories, thanks to more disposable income, growing consumer confidence and fewer Covid restrictions. Compared to 2020, shoppers plan to spend 12 percent more on sporting goods and 9 percent more on apparel and footwear, and home and garden products—the latter of which has flourished during more than a year of social distancing.

Gregg Zegras, executive vice president and president, global e-commerce, at the global tech firm, says the results indicate that “Americans are eagerly anticipating a more normal summer.”

“Spending on vacations, dining out and other services are widely expected to increase following deep declines in 2020,” he added. “But, Pitney Bowes BOXpoll respondents also tell us they also plan to spend more on products this summer versus last. This is encouraging and hopeful news for retailers, both because product sales typically experience a decline from spring to summer, and because y-o-y product sales were surprisingly strong last summer too.”

Geography is influencing spend as well. The BOXpoll found that 17 percent of urban dwellers plan to spend more than their suburban and rural counterparts, while 13 percent of shoppers in the Northeast and 10 percent of those in the West plan higher spending increases this summer than those in the Midwest and South.