Despite political and economic uncertainties, America’s retailers are in for another decent year marked by 3.8 to 4.4 percent sales growth, according to the National Retail Federation.
Based on that level of sales growth, the NRF estimated total 2019 retail sales of between $3.82 trillion and $3.84 trillion.
Online sales are seen growing 10 to 12 percent, resulting in total online sales of between $751.1 billion and $764.8 billion, which are included in the total sales estimates.
In making its forecast, the NRF said the gains will be generated by the underlying health of the economy and consumers, including low unemployment, tax benefits and low gas prices, offsetting the threats of a trade war, the volatile stock market and the government shutdown last month.
“We believe the underlying state of the economy is sound,” NRF president and chief executive officer Matthew Shay said on Tuesday. “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.”
The NRF estimated that retail sales for 2018 grew 4.6 percent over 2017 to $3.68 trillion, exceeding its own forecast of at least 4.5 percent growth. The number includes online and other non-store sales, which were up 10.4 percent at $682.8 billion. That met NRF’s forecast of 10 to 12 percent online growth, and online is expected to grow in the same 10-to-12-percent range again this year. The numbers exclude automobile dealers, gasoline stations and restaurants.
However, the NRF cautioned that its 2018 estimate could be revised because it lacked December statistics due to the government shutdown. The NRF gets data from the Commerce Department, which was closed during the recent government shutdown and has not yet released December figures.
An even more optimistic projection came from Customer Growth Partners, which is forecasting 2019 retail sales will total $3.77 trillion, up 5 percent from 2018’s $3.59 trillion, the fastest growth pace since pre-Recession. “Retailers are poised to see a stellar 2019, buoyed by rising wages, robust job growth and plummeting gasoline prices,” said Craig Johnson, president of Customer Growth Partners.
CGP also projected direct-to-consumer/online would show 11.1 percent growth.
“As we’ve seen for two decades now, the single biggest driver of retail spending is disposable income growth,” said Johnson. “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 through 2019.”
According to NRF chief economist Jack Kleinhenz, “We are not seeing any deterioration in the financial health of the consumer. Consumers 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 the consumer income and spending that are 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. Growth remains solid.”
NRF expects the overall economy to gain an average of 170,000 jobs per month, 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. Gross domestic product is likely to grow about 2.5 percent over 2018.
Kleinhenz said that inflation and interest rates are expected to remain low this year and that retail sales have been helped by recent reductions in gasoline prices.
Kleinhenz noted that the U.S. economy has entered into its 10th year of expansion. “It’s our belief it will continue through 2019,” though he added that the benefit of income tax cuts will fade.
He also said that the Federal Reserve has changed direction on how they are going to handle interest rates. “They are focused on avoiding choking off this expansion.”
On a cautionary note, Kleinhenz said economic growth can be impacted by global affairs, that there has been some tightening of consumer credit by banks.
“The bottom line is that the economy is in a good place. Consumer spending is solid and I think it has some further growth,” Kleinhenz said.
On a political note, Shay said, “the fundamental job of our elected leaders is to do no harm and avoid self-inflicted mistakes that can have a negative effect on consumer confidence. Keep the government open and do not allow another government shutdown, which could happen next week. Closing the government is not a responsible way to insure continued economic growth.”