The National Retail Federation has reduced its forecast for retail sales for 2017 to an increase of between 3.2 and 3.8 percent.
That compares to NRF’s earlier forecast that sales for 2017 would rise 3.7 to 4.2 percent.
“Meaningful revisions to retail sales numbers by the Census Bureau and similar revisions to personal income and consumption by the Bureau of Economic Analysis have both affected our forecast and have required us to adjust our 2017 sales projection,” NRF chief economist Jack Kleinhenz said. “While weaker-than-expected spending in the first quarter along with decelerating inflation has also contributed to the revision, NRF anticipates stronger sales heading into the fall and holiday seasons.”
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 one month since the beginning of 2010.
Asked if the NRF factored in the potential impact of Hurricanes Harvey and Irma, Kleinhenz replied, “Hurricanes were not a factor at this time. It’s too soon to evaluate the impact they might have in retail spending. We will be watching closely on how the data will indicate their impact on the coming months.”
Severe weather certainly hurts many stores, particularly clothing stores, causing damage and forcing stores to close down for some time and lose business which can’t be made up entirely. In some cases, however, hurricanes, blizzards and other natural disasters can lead to a surge in retail sales as consumers stock up on provisions such as batteries, flashlights, canned food and water, as well as supplies to repair damage to their homes.
The expected increase in total sales for 2017 will be largely due to the continued growth of such companies as Amazon, TJX Cos. and Home Depot, while department stores and fashion specialty stores, many of which are closing significant numbers of stores, are not seen as generating much growth, if at all, though they have been citing improving trends in some categories during the second half and for back-to-school, and believe the second half will represent a pickup.
Macy’s, for example, expects total sales are expected to be down between 3.2 percent and 4.3 percent in fiscal 2017. However, Nordstrom recently raised its sales forecast for the year to 4 percent, compared to the previous forecast of 3 to 4 percent.
Retailers this year should be spurred to some extent by first-half increases in employment, wages, the stock market and consumer confidence. The weather for the winter is expected to be colder than last year when there were record warm temperatures, which could help outerwear and cold weather accessories. Independent of the weather, the best retail sectors will be home improvement, home decor, autos, food, off-price apparel and beauty. However, there are several wild cards that could disrupt business, including North Korea, Syria and political divisions in the U.S.
As reported, James Bohnaker, economist, IHS Markit, predicted retail growth to accelerate in the second half to 3.8 percent at an annual rate, compared to an estimated 2.6 percent in the first half of 2017. He said retail will rise 3.7 percent in the third quarter and 3.96 percent in the fourth quarter. Those statistics include all apparel, furniture, electronics, sporting goods, general merchandise, auto, restaurants, gas, food and miscellaneous items.
Excluding food, gas, autos and building materials, retail sales are projected to grow 2 percent at an annual rate in the second half, according to IHS Markit.
Last month, the Census Bureau of the Department of Commerce estimated that total retail sales increased about 0.5 percent in the second quarter from the first quarter of 2017. The second-quarter 2017 e-commerce estimate increased about 16.2 percent from the second quarter of 2016. E-commerce sales in the second quarter of 2017 accounted for 8.9 percent of total sales.