NRF issues optimist forecast for 2016 retail sales growth

Retail industry sales will grow an estimated 3.1% in 2016, outpacing the 10 year industry average, as economic headwinds diminish, according to a forecast released by the National Retail Federation.

The NRF sales forecast of 3.1% excludes automobiles, gas stations and restaurants and exceeds the 10 year growth rate of 2.7%. Non-store retail sales are forecast to growth between 6% and 9%.

“Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments, particularly in China, we think 2016 will be favorable for growth in the retail industry,” said NRF President and CEO Matthew Shay. “All of the experts agree that the consumer is in the driver’s seat and steering our economic recovery. The best thing the government can do is stay out of the way, stop proposing rules and regulations that create hurdles toward greater capital investment and focus on policies that help retailers provide increased income and job stability for their employees.”

Underpinning the 3.1% growth forecast are a range of assumptions. For example, NRF’s view is that economic growth should be more of the same and uneven, somewhere between 1.9% and 2.4%. Also expected are employment gains of approximately 190,000 on an average monthly basis. While that pace is down from 2015, it is consistent with the labor market growing near its underlying trend and by year end, unemployment should be around 4.6%, according to NRF.

In terms of the outlook for consumer spending, NRF contends the prospects for consumer spending are straightforward since more jobs equals more income, which equals more spending. However, spending will come largely from the growth in jobs and not as much from increased wages, according to the trade group.

“The economy had a bumpy ride in 2015 with fits and starts along the way,” said NRF Chief Economist Jack Kleinhenz. “Despite the volatility, the economy continued to reduce unemployment, raise wages and actually increase real gross domestic product by 2.4%. Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services. Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment.”