NRF: 2025 retail sales to grow 2.7% to 3.7% as spending slows
Consumer spending is not unraveling but it is slowing as worries over sticky inflation and the impact of tariffs weigh on consumers and businesses.
Retail sales during 2025 will grow between 2.7% and 3.7% over 2024, to between $5.42 trillion and $5.48 trillion, according to the National Retail Federation. The NRF noted that “significant policy uncertainty” from numerous factors is implied by the broad range of its forecast.
The 2025 forecast compares with 3.6% annual sales growth of $5.29 trillion dollars in 2024. This year’s forecast is in line with the 10-year pre-pandemic average annual sales growth of 3.6%.
Non-store and online sales, which are included in the total figure, are expected to grow between 7% and 9% year-over-year, to a total of between $1.57 trillion to $1.6 trillion. By comparison, non-store and online sales grew 8.1% to a total of $1.47 trillion in 2024. E-commerce sales in 2024 accounted for 16.1% of total retail sales, according to the U.S. Department of Commerce.
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“Any way you look at it, a lot is riding on the consumer,” said NRF chief economist Jack Kleinhenz. “While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances. Consumer spending is not unraveling.”
The forecast comes as consumer confidence and sentiment has been on the decline. Kleinhenz added that even though consumer confidence is declining, due largely to lingering inflation and consumers’ anxiety over tariffs, that doesn’t mean there will be an immediate drop in consumer spending.
“It’s the hard data on employment, income and tariff-induced inflation — not consumer sentiment — that supports our view of a slower trajectory for consumer spending,” he said.
NRF expects GDP growth to decline just below 2% in 2025, down from 2.8% in 2024 and below the trend of the past few years.
Tariffs
The NRF said it includes the potential impact of tariffs in its forecast, but indirectly.
“It is very difficult to directly measure the breadth, quantum and duration of the tariffs on retail sales at this time,” the group stated. “We have factored higher inflation, slower job growth and slower economic activity into our modeling.”
With the implementation of tariffs, NRF expects PCE inflation during 2025 to remain at the current level of about 2.5%. Overall, household balance sheets appear to be in good shape. Delinquencies on auto loans and credit card payments have risen, but remain in line with the pre-pandemic trend. The consumer credit picture should remain healthy as long as the labor market remains solid, according to the NRF.
NRF’s calculation of retail sales excludes automobile dealers, gasoline stations and restaurants to focus on core retail. The 2025 retail sales forecast is based on economic modeling that considers a variety of indicators including employment, wages, disposable income, consumer credit and previous retail sales.
