The retail sales in the US will increase between 3.8% and 4.4% to more than $3.8 trillion during 2019, forecast the National Retail Federation (NRF). These estimates are despite threats from an ongoing trade war, volatile stock market and effects of the government shutdown.
“We believe the underlying state of the economy is sound,” states NRF president & CEO, Matthew Shay. “More people are working, they’re making more money, their taxes are lower and their confidence remains high. The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds. It’s time for artificial problems like trade wars and shutdowns to end, and to focus on prosperity not politics.”
Preliminary estimates show that retail sales during 2018 grew 4.6% over 2017 to $3.68 trillion, exceeding NRF’s forecast of at least 4.5% growth. The number includes online and other non-store sales, which were up 10.4% at $682.8 billion. That met NRF’s forecast of 10-12% online growth; and online is expected to grow in the same 10-12% range again this year. The numbers exclude automobile dealers, gasoline stations and restaurants.
“We are not seeing any deterioration in the financial health of the consumer,” adds Jack Kleinhenz, NRF chief economist. “Consumers are in better shape than any time in the last few years. Most important for the year ahead will be the ongoing strength in the job market, which will support the consumer income and spending that are both key drivers of the economy. The bottom line is that the economy is in a good place despite the ups and downs of the stock market and other uncertainties. Growth remains solid.”
NRF expects the overall economy to gain an average of 170,000 jobs per month, down from 220,000 in 2018, and that unemployment – currently at 4% – will drop to 3.5% by the end of the year. Gross domestic product (GDP) is likely to grow about 2.5% over 2018.
Kleinhenz said inflation and interest rates are expected to remain low this year and that retail sales have been helped by recent reductions in gasoline prices. Retailers so far have been able to largely mitigate the impact of new tariffs on steel, aluminum and goods from China imposed in the past year. But tariffs could drive up the cost of consumer products and affect business direction and profits this year, particularly if tariffs on $200 billion in Chinese products rise from 10 to 25% as currently scheduled for March 1, he said.