The National Retail Federation (NRF) is forecasting that retail sales during November and December will increase modestly over 2018, but that the U.S.-China trade war, interest rates, and political upheaval worldwide will contribute to a spending slowdown.
The retailer organization predicts that holiday retail sales will increase 3.8%–4.2% over 2018, to a total of between $727.9 billion and $730.7 billion. Last year’s holiday sales totaled $701.2 billion, which the NRF characterized as “an unusually small increase of 2.1 percent over the year before, amid a government shutdown, stock market volatility, tariffs, and other issues.”
New tariffs are already making shoppers jittery, according to a September poll from the NRF. It found that 79% of consumers surveyed said they were “concerned that tariffs will cause prices to rise, potentially affecting their approach to shopping.”
The Trump administration has identified $300 billion in annual imports from China for 15% tariffs in two parts, on Sept. 1 and Dec. 15. The Sept. 1 list covered around $125 billion worth of goods, most of them consumer products, including smartwatches and speakers, some apparel, footwear, and Bluetooth headphones.
The Dec. 15 tariffs will likely be more noticeable for consumers. Reuters reports that goods set to shoulder the punitive tariffs include $43 billion in cell phones imported from China in 2018, $37 billion in laptop and tablet computers, and $12 billion in toys.
The NRF further forecasts online and other non-store sales, which are included in the total, will increase between 11% and 14% to between $162.6 billion and $166.9 billion, up from $146.5 billion in 2018.
“The U.S. economy is continuing to grow and consumer spending is still the primary engine behind that growth,” NRF president and CEO Matthew Shay said in a prepared statement. “Nonetheless, there has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric. Consumers are in good financial shape and retailers expect a strong holiday season. However, confidence could be eroded by continued deterioration of these and other variables.”
NRF chief economist Jack Kleinhenz, added in the same statement that forecasting in these tumultuous times can be problematic: “There are probably very few precedents for this uncertain macroeconomic environment,” he said. “There are many moving parts and lots of distractions that make predictions difficult. There is significant economic unease, but current economic data and the recent momentum of the economy show that we can expect a much stronger holiday season than last year.”
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