Retail Sales Forecast Increases, But Tariff Worries Remain
The National Retail Federation (NRF) today increased its retail sales forecast for 2018, saying sales are expected to grow more than previously predicted, thanks to tax reform and other positive economic inputs. NRF now expects 2018 retail sales—excluding cars, gasoline and restaurant meals—to increase at a minimum of 4.5% over 2017, rather than the 3.8% to 4.4% range forecast earlier this year.
“Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation’s consumer-driven economy,” said NRF president and CEO Matthew Shay.
However, Shay added a “but…” to his generally optimistic outlook. “A tremendous amount of uncertainty about the second half remains,” he said. “It could be a banner year for the industry, or we could keep chugging along at the current rate.”
The overhang of uncertainty stems from tariffs, which could dampen consumer confidence. “We don’t want to see these economic gains derailed by protectionist trade policy,” said Shay.
Given that retailers are ramping up imports—currently at record levels—and stocking their warehouses before most of the proposed tariffs will take effect, “an immediate impact on prices on consumer goods is unlikely, but that won’t last for long,” Shay said.
Moreover, he added, “Just the mere talk of tariffs negatively impacts consumer and business confidence, leading to a decline in spending. It’s time to replace tariffs and talk of trade wars with diplomacy and policies that strengthen recent gains, not kill them.”
NRF’s chief economist, Jack Kleinhenz, said that along with a 4.8% year-over-year increase in retail sales and a revised forecast for 2018 GDP growth, the upwardly-revised forecast is also due to government revisions to retail sales, personal income and consumption numbers from 2016 and 2017 that affect year-to-year comparisons.
Kleinhenz said total retail sales have grown year-over-year every month since November 2009. Retail sales as calculated by NRF—which do not count automobiles, gasoline stations and restaurants in the total—have increased year-over-year in all but three months since the beginning of 2010.
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