NRF is largely bullish on 2019 retail sales forecast

While perhaps not in total accord with President Trump, who said during the State of the Union speech last night, that the United States is in the middle of an “economic miracle,” the National Retail Federation (NRF) said that the current state of the economy is “sound.”

Even though that term may be somewhat tempered in comparison to how Trump sees things, that, by no means, suggests that current economic conditions are anything to scoff at either. The NRF made that very clear in its 2019 retail sales forecast for growth coming in between 3.8%-to-4.4% to more than $3.8 trillion. $3.82 trillion, to be exact.  OK, so that forecast falls short of the NRF’s call for a minimum increase of 4.5% from 2017 to 2018, but it is still pretty good. And it is also worth keeping in mind that the 2018 estimate originally matched the 2019 estimate of 3.8%-to-4.4% growth, too. Online store sales alone, should they rise at the forecasted rate of 10%-to-12%, would come in between $751.1 billion and $764.8 billion.

So, how did 2018 turn out for retail sales?

Based on preliminary estimates provided by the NRF, 2018 retail sales (excluding automobile dealers, gasoline stations, and restaurants) did, in fact, top the 4.5% forecast, coming in at an annual growth rate of 4.6%, with the dollar at $3.68 trillion. NRF added that this figure includes online and other non-store sales that were up 10.4% to $682.8 billion, with the expectation that this number will again be up between 10%-to-12% in 2019.

These results are preliminary, because the 2018 data does not include the month of December, as the Department of Commerce, the source of retail sales data, was closed because of the government shutdown

In its forecast publication, NRF CEO Matthew Shay was bullish on the state of retail sales, while also noting that certain current events could negatively impact things, saying: “We believe the underlying state of the economy is sound. 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.”

Factors cited for strong retail sales growth in 2019, identified by the NRF’s Jack Kleinhenz, include: a still strong state of consumer spending compared to recent years; ongoing strength in the job market; and inflation and interest rates pegged to remain low in 2019, as well as retail sales seeing a benefit from lower gasoline prices.

In regards to the ongoing U.S.-China trade tension, the NRF said that, to date, retailers have, for the most part, been able to stave off the impact of new tariffs on steel, aluminum and goods from China that have taken effect over the last year. But it cautioned that tariffs do have the potential to increase consumer product prices, while also impact business direction and tariffs in 2019, should the current 10% tariff on the $200 billion in China-originated products going to the U.S. head up to 25% next month.

As we all well know, retail sales account for roughly 70% of United States economic output. That metric has been as consistent as any for a very long period, to be sure. While things, as currently constructed, appear to be in a good place, it can be difficult to see what awaits us. When we talk with shippers and carriers about how things are going, more often than not, the first thing they bring up, good or bad, is the state of the retail economy. It is simply too large to ever truly be overlooked and always has a lot riding on it. While 2020 GDP growth is expected to fall, retail sales are expected to rise, and that is something we should all be thankful for at the end of the day. Our economy depends on it, perhaps more so now than ever.