A phenomenon known as “animal spirits” may have played a role in record-setting national holiday sales results in the last two months of 2020. It’s another way of expressing COVID relief.
“Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday,” said Jack Kleinhenz, chief economist for the National Retail Federation. “This was clearly a year when animal spirits outweighed conventional wisdom.”
In NRF’s February economic review, it reported $798.4 billion in 2020 holiday spending, the highest volume on record. The 8.3% gain in 2020 annual holiday sales more than doubled the previous five-year average of 3.5% and set a record in percentage gains in sales dating back to 2002. NRF expected sales to increase between 3.6% and 5.2%.
Kleinhenz attributed the “animal spirits” phrase to English economist John Maynard Keynes who has observed that consumer behavior can sometimes be more emotional than rational. Other factors Kleinhenz cited were:
- Receipt of government stimulus checks
- Increased savings from not traveling, dining out or attending entertainment events.
- The introduction of safer retail shopping such as buy online, pick up in-store and curbside pickup service
- Rising home values and stock prices and the announced arrivals of vaccines to ease worries about the COVID-19 virus and state restrictions on activities.