The National Retail Federation is predicting retail sales will increase between 3.8% and 4.4% in 2019 to more than $3.8 trillion, despite ongoing threats of a trade war, a volatile stock market and the impact of the recent government shutdown.
“We believe the underlying state of the economy is sound,” said Matthew Shay, NRF President and CEO. “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 the prosperity not politics.”
Preliminary estimates show that domestic retail sales grew 4.6% in 2018 to $3.68 trillion, just ahead of NRF’s forecast of 4.5%; this figure excludes automobile dealers, gasoline stations and restaurants.
This includes online and non-store sales, which were up 10.4% to $682.8 billion and in its range of 10%-12% for the year. NRF is predicting the same growth range for this category for 2019, which would put it between $751.1 billion and $764.8 billion.
“We’re not seeing any deterioration in the financial health of the consumer,” said Jack Kleinhenz, chief economist for NRF. “They 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 consumer income and spending, 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.”
Kleinhenz said retailers have been able to largely mitigate the impact of new tariffs on steel, aluminum and goods from China imposed in the past year. Tariffs could drive up the cost of consumer products significantly, particularly if they rise by 10% to 25% on $200 billion in Chinese goods as trade talks continue and the Trump administration talks tough.