The National Retail Federation has forecast that retail sales during 2020 will increase between 3.5% and 4.1% to more than $3.9 trillion despite uncertainty from the lingering trade war, coronavirus and the presidential election.
In specific terms, 2020 retail sales should total between $3.93 trillion and $3.95 trillion, NRF forecasted. It expects online sales, which are included in the total, to grow between 12% and 15% to between $870.6 billion and $893.9 billion.
Preliminary results indicate 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, which, the organization pointed out, had to be based on incomplete data because of last year’s government shutdown. The total includes online and other non-store sales, which gained 12.9% to $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. NRF chief economist Jack Kleinhenz maintained that unemployment, which remains near a 50-year low, and low interest rates that have spurred home buying and mortgage refinancing, should add to consumer spending on furniture and other home-related products. While disposable income increases have moderated recently, inflation has been low, and consumers have been confident enough to use their credit cards or savings to sustain their spending.
Although consumers and small business owners are confident, Kleinhenz stated that corporate CEOs remain cautious about 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 investing. In addition, the wide range of potential policy outcomes associated with November’s elections could cause both consumers and businesses to proceed with caution. The forecast assumes that the coronavirus does not become a global pandemic, but if factory shutdowns in China continue, particularly if they disrupt delivery of holiday season merchandise, business confidence and retail sales could erode.
“The nation’s record-long economic expansion is continuing, and consumers remain the drivers of that expansion,” said Matthew Shay, NRF president and CEO. “With gains in household income and wealth, lower interest rates and strong consumer confidence, we expect another healthy year ahead. There are always wild cards we cannot control like coronavirus and a politically charged election year. But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way.”