Yesterday the National Retail Federation (NRF) released a 2019 forecast that predicted retail sales will increase between 3.8 percent and 4.4 percent, to more than $3.8 trillion.
Should the forecast become a reality, 2019’s retail growth would mark a slowdown from 2018’s rate—retail sales grew 4.6 percent in 2018 over 2017, to $3.68 trillion. Last year’s figures include a debatable margin of error, since the Department of Commerce was closed during the shutdown and hasn’t yet released December retail sales figures.
The NRF expects the economy to gain an average of 170,000 jobs per month in 2019, down from 220,000 in 2018, and that unemployment, which is currently at 4 percent, will fall to 3.5 percent by the end of the year.
NRF chief economist Jack Kleinhenz said in an NRF statement, “We are not seeing any deterioration in the financial health of the consumer. Consumers are in better shape than at any time in the last few years.”
Factors that could negatively impact the retail sector in 2019 include the new tariffs on steel, aluminum, and other goods from China that the U.S. imposed last year. On March 1, the government is scheduled to hike tariffs on $200 billion in Chinese products from 10 percent to 25 percent.
There’s also the financial fallout of the hundreds of thousands of government workers who lost roughly a month of pay (some will recoup it, some reportedly will not) due to the longest government shutdown in American history.
Kleinhenz said it’s been “difficult to measure the impact” of the shutdown, but said his main concern is the IRS’ delays in processing its backlog of tax returns (the government agency was shut down), which could negatively impact retail.
He added, “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.”