U.S. retail sales are expected to rise between 3.8 percent and 4.4 percent to more than $3.8 trillion in 2019, the National Retail Federation (NRF) said on Tuesday, citing high consumer confidence, low unemployment and rising wages.
Preliminary estimates show retail sales grew 4.6 percent in 2018 to $3.68 trillion, exceeding the retail industry group’s forecast for growth of at least 4.5 percent, the NRF said.The 2018 results are based on Commerce Department data up through November but include NRF estimates for December, as the agency was closed during the recent government shutdown and has not yet released December figures, the NRF said.
“More people are working, they’re making more money, their taxes are lower and their confidence remains high,” NRF President and Chief Executive Matthew Shay said in a statement. In 2018, a healthy economy and rising wages gave consumers the confidence to shop and splash out on retailers’ annual bargains during the holiday season. “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,” Shay added.
The Trump Administration’s tariff war with China has forced many retailers to stockpile inventory from China to avoid higher tariffs that may kick in this year. NRF Chief Economist Jack Kleinhenz said on Tuesday retailers so far have been able to reduce the impact but that retailers and consumers would likely have to pay higher prices for certain purchases if tariffs on $200 billion in Chinese products rise from 10 percent to 25 percent on March 1. The trade body also said online and other non-store sales, which are included in the overall number, were expected to increase between 10 percent and 12 percent. The retail sales numbers exclude automobiles, gasoline stations and restaurants, the NRF said.
It expects the overall economy to gain an average of 170,000 jobs per month in 2019, down from 220,000 in 2018, and that unemployment – currently at 4 percent – will drop to 3.5 percent by the end of the year. Boosted by rising wages, robust job growth and lower gas prices, consumer research firm Customer Growth Partners (CGP) said on Monday retail sales in 2019 will total $3.77 trillion, up 5 percent from $3.59 trillion in 2018, the fastest growth pace since 2006. “Unlike the debt-fueled bubble economy of the mid-2000s, today’s retail growth is based on strong fundamentals, suggesting that consumers – almost 70 percent of the economy -will continue healthy spending on a healthy pace at least through 2019,” CGP President Craig Johnson said in a statement.