NRF expects retail sales to increase from previous year

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NRF expects retail sales to increase from previous year

By Marianne Wilson - 08/13/2018
The National Retail Federation increased its retail sales forecast for 2018, citing tax reform and other positive economic indicators. But the positive news came with a warning.

NRF now expects 2018 retail sales to increase at a minimum of 4.5% over 2017 rather than its previous forecast of 3.8% to 4.4%. (The numbers exclude automobiles, gasoline stations and restaurants.) But it warned that tariffs threaten to dampen consumer confidence.

“Despite this upgrade in our forecast, uncertainty surrounding the trade war and higher-than-expected inflation due in part to increased oil prices could make consumers cautious during the fall season,” said Jack Kleinhenz, chief economist, NRF.

The NRF has been outspoken in its beliefs that the tariffs on Chinese goods could derail the nation’s ecomomic progress.

“We don’t want to see these economic gains derailed by protectionist trade policy,” said Matthew Shay, president and CEO, NRF. “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.”

Tariffs of 25% on $34 billion worth of Chinese goods took effect in July, and are scheduled to take effect this month on another $16 billion, but both lists include a relatively low number of consumer products. Another round of tariffs on $200 billion in goods from China that would include a broader array of consumer items is currently under consideration and is expected to be finalized in September.

Imports, meanwhile, have been at record levels this summer as retailers bring merchandise into the country before the tariffs can take effect, according to NRF’s Global Port Tracker report.

Retail sales in the first half of 2018 grew 4.8% year-over-year and have been up 4.4% year-over-year in the most recent three-month moving average. NRF now expects gross domestic product for the year to grow at the higher end of the 2.5% to 3% range it forecast earlier.

Kleinhenz said total retail sales have grown year-over-year every month since November 2009, and retail sales as calculated by NRF — which excludes automobiles, gasoline stations and restaurants — have increased year-over-year in all but three months since the beginning of 2010.