National Retail Federation 2024 retail sales forecast calls for growth

Growth is in the cards for 2024 retail sales, according to a forecast issued this week by the Washington, D.C.-based National Retail Federation (NRF).

NRF is pegging 2024 retail sales to increase between 2.5%-to-3.5% to between $5.23 trillion and $5.28 trillion. Should this forecast come to fruition, NRF said that it would top 2023 retail sales, which rose 3.6% to $5.1 trillion. And it added that the 2024 estimate includes non-store and online sales, which are pegged to rise between 7%-to-9% annually to between $1.47 trillion to $1.50 trillion, topping 2023’s $1.23 trillion tally. NRF’s retail sales estimates do not include spending for motor vehicles, gasoline and restaurants.

As for other economic indicators, NRF is calling for the following:

• 2024 GDP at 2.3%, less than 2023’s 2.5% but enough to sustain job growth;
• inflation is expected to moderate to 2.2% annually, due to a cooling economy and the labor and product market in better balance and “retreating” housing costs; and
• 100,000 fewer jobs on average per month compared to 2023, coupled with a 4% unemployment rate average

NRF CEO Matthew Shay highlighted the significance of retail sales, in terms of its impact on the economy, in remarks he made during the NRF’s fourth annual “State of Retail & the Consumer” virtual session held yesterday.

“Retail’s impact on our economy is significant,” he said. “With more than 4.6 million establishments, the retail industry supports 55 million jobs in America. That's more than one out of every four jobs, which makes retail the largest private sector employer in the economy, and the industry contributes $5.3 trillion annually to our nation's GDP.  As NRF predicted, retail sales returned to more sustainable levels in 2023 and we had another record holiday season as well.

The top NRF executive added that over the last year, consumers remained resilient, driving economic growth as they navigated their way through the headwinds of continued but moderating inflation and elevated interest rates. Consumer spending was supported by a strong jobs market and gains in real wages across all income levels and demographics. And so far in 2024, we've seen this pattern continue. And we're confident that moderate but steady growth will continue through the end of this year.

NRF Jack Kleinhenz explained that the foundation of the economy is relatively sturdy, remaining on a sustainable path, adding that while it is slowing, it continues to stay aloft and strong enough to sustain job growth.

“The economy is primarily supported by consumers who have shown much greater resilience than expected, and it's hard to be bearish on the consumer,” said Kleinhenz. “The question for 2024, ultimately, is will consumer spending maintain its resilience? Consumer behavior and spending power is tied to their financial health. And at this moment, the consumer sector looks good. Resiliency on the job front has solidified the health of consumers through we expect it somewhat in the coming months.”

While there were some solid gains in employment already this year, he said NRF expects about 100,000 fewer jobs on average per month, compared to last year. And he added that this accounts for the step down expected in consumer spending and retail sales, while slower growth in income from a cooling labor market will still provide for a healthy amount of consumer spending.

“Consumer balance sheets and debt servicing levels remain in good condition as rising home and stock prices in 2023 likely stimulated greater consumer spending via the so-called wealth effect,” he said. “This should continue into 2024. Several surveys revealed that consumers appear to have a favorable outlook, which should also support their willingness to spend. Yet many consumers are feeling the pinch on spending from tight credit and inflation. In recent months, moderating wage growth, supply chain healings, slightly weaker demand, and higher interest rates have helped to bring down meaningfully while several inflation indicators point to a slight reacceleration in prices to start 2024, I don't believe this is an inflection point. We expect inflation to steadily move down, reaching 2.2% on a year over year basis. In December.”

Looking at the retail supply chain from a shipper’s perspective, John Furner, President and CEO, Walmart U.S., said on the briefing that Walmart is leveraging innovative ways of doing things to bring more of the supply chain closer to customers, which he said is great for lead times and cycle times—or the time from when it sees there is demand for something and it can react.

“But that's a part of the broader global supply chain, and certainly there's a bit of an argument whether we had a supply chain problem or we had a demand problem and ultimately, I think that we will remember we had more demand than the supply chain could handle at certain times or at least in certain ways we were distributing and the ports backed up. That was part of a problem that we had to deal with throughout 2022. But it appears that most of that is now behind us.”