The nation’s retail sales will increase between 3.5% and 4.1% in 2020.
That’s according to the National Retail Federation, which forecasts that sales will increase between 3.5% and 4.1% despite uncertainty from the lingering trade war, coronavirus and the presidential election. Based on the forecast, 2020 retail sales should total between $3.93 trillion and $3.95 trillion. (NRF numbers exclude automobile dealers, gasoline stations and restaurants.). Online sales, which are included in the total, are expected to grow from 12% to 15% to between $870.6 billion and $893.9 billion.
The NRF forecast assumes that coronavirus does not become a global pandemic. But the group warned that business confidence and retail sales could be impacted if factory shutdowns in China continue, particularly if delivery of holiday season merchandise is affected.
“The economy is growing at a more modest pace, but the underlying economic fundamentals remain in place and are positive,” stated NRF chief economist Jack Kleinhenz. “Consumers remain upbeat and have the confidence to spend, and the steady wage growth that has come with the strong job market is fueling their spending. The state of the consumer is very healthy.”
Preliminary results show that retail sales during 2019 grew 3.7% over 2018 to $3.79 trillion, just short of NRF’s forecast of at least 3.8% growth. The total includes online and other non-store sales, which were up 12.9% at $777.3 billion, beating NRF’s forecast of up to 12% growth.
NRF expects the overall economy to gain between 150,000 and 170,000 jobs per month in 2020, compared with an average 175,000 in 2019, and that unemployment – currently at 3.6% – should stay around 3.5%. Gross domestic product is likely to grow 1.9%, down from preliminary estimates of 2.3% in 2019.
While consumers and small business owners are confident, Kleinhenz said that corporate CEOs remain cautious over trade policy. Further progress to build on the Phase One trade agreement with China could boost the economy and accelerate corporate spending and hiring. Conversely, escalation of the trade war could discourage corporate investments. Meanwhile, the wide range of potential policy outcomes associated with November’s elections could cause both consumers and businesses to be cautious.
Kleinhenz cited unemployment that remains near a 50-year low and low interest rates that have spurred home buying and mortgage refinancing that should add to consumer spending on furniture and other home-related products. While disposable income has moderated recently, inflation has been low, and consumers have been confident enough to use their credit cards or savings to sustain their spending.