The National Retail Federation today increased its retail sales forecast for 2018, saying 2018 retail sales to increase at a minimum of 4.5 percent over 2017 rather than the 3.8 to 4.4 percent range that was forecast earlier this year. (The numbers exclude automobiles, gasoline stations and restaurants.) Retail sales in the first half of 2018 grew 4.8 percent year-over-year and have been up 4.4 percent year-over-year in the most recent three-month moving average.
“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,” NRF President and CEO Matthew Shay said. “Tax reform and economic stimulus have created jobs and put more money in consumers’ pockets, and retailers are seeing it in their bottom line. We knew this would be a good year, but the first half turned out to be even better than expected
While the NRF admits overall sales are expected to grow more than previously predicted, thanks to tax reform and other positive economic inputs, the group is warning that recently enacted tariffs against countries such as China threaten to dampen consumer confidence and could lead to a decline in spending
“We don’t want to see these economic gains derailed by protectionist trade policy,” Shay said. “With retailers ramping up imports 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. And 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. So a tremendous amount of uncertainty about the second half remains. It could be a banner year for the industry, or we could keep chugging along at the current rate.”