As we recently passed the anniversary of the World Health Organization declaring COVID-19 a global pandemic, we’re beginning to see signs of light at the end of this long and winding tunnel. States and local municipalities have begun easing restrictions, job growth is improving, and consumer optimism is continuing to rise based on both the $600 stimulus checks approved last December and the impending next round.

February’s impressive employment report indicated that 379,000 new jobs were added, led by 355,000 jobs in the leisure and hospitality sector (286,000 at restaurants and bars alone). Smaller gains were also posted in temporary help services, healthcare and social assistance, retail trade, and manufacturing. Employment declined in state and local government, construction, and mining. Initial jobless claims also remain elevated and have not dropped below one million a week since last May, indicating that the economy is still looking for traction.

The powerful trifecta of the new fiscal stimulus, improving health conditions, and accelerated vaccinations will lead to an economic growth period unlike any other. Retail sales jumped a revised 7.6% in January, up from 5.3% in all major categories of spending. The biggest winners were department stores, home furnishings, electronics, non-store/e-commerce, sporting goods and hobbies, and restaurants. While winter storms impacted February retail sales in Texas and northeastern states, overall sales will remain strong in the future.

The value of personal savings in the United States now exceeds $2.3 trillion and will rise further once the additional $1,400 fiscal stimulus checks are delivered. Add in a favorable debt environment (consumers have the lowest debt service ratio in over 40 years), a year’s worth of pent-up demand after not being able to spend freely, and rising consumer confidence in the safety of dining and shopping, and you have the ingredients for an unprecedented period of retail growth. These welcome indicators will drive consumer spending, which accounts for nearly 70% of U.S. GDP.

Oxford Economics predicts the $1.9 trillion American Rescue Plan will lead to real consumer spending growth of 7.6% in 2021, boost real GDP growth by 3.3 percentage points by Q4 2021, and support growth of 7% in 2021 and 3% in 2022. Goldman Sachs, Bank of America – Merrill, and numerous other forecasters predict 6% growth or better in 2021. The mean forecast of 5.7% is a full percentage point higher than the February forecasts, per Consensus Economics. Strong spending, rising GDP, increased business investment, industrial production, pre-tax corporate profits, low interest rates, additional job growth, and a presumed rise in household formation will ultimately drive improvement across real estate asset classes.