Retail

Retail sales in 2018 could climb higher than forecast, the National Retail Federation says

Key Points
  • Spending at retailers — excluding automobiles, gasoline stations and restaurants — is now predicted to climb at least 4.5 percent, The National Retail Federation says in its updated outlook for 2018.
  • That compares with a prior forecast range of 3.8 to 4.4 percent.
  • Retailers including Home Depot, Walmart and Macy's are set to report earnings later this week, which will offer a look at how these companies feel ahead of the all-important holiday season.
National Retail Federation forecasts 4.5% rise for 2018
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National Retail Federation forecasts 4.5% rise for 2018

Retail sales in 2018 are now forecast to climb higher than what had been expected thanks to U.S. tax reform and other upbeat economic indicators, according to an industry trade organization.

Spending at retailers — excluding automobiles, gasoline stations and restaurants — is predicted to climb at least 4.5 percent, the National Retail Federation said Monday, giving an updated outlook for the remainder of the year. That's compared with a prior forecast range of 3.8 to 4.4 percent.

"Higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation's consumer-driven economy," NRF President and CEO Matthew Shay said in a statement. "We knew this would be a good year, but it's turning out to be even better than expected."

Still, there is uncertainty around a trade war with China that could impact retail spending, the group said. President Donald Trump has proposed additional tariffs on $200 billion in goods from China, which would include a mix of consumer items. The proposal is expected to be finalized next month, following a public comment period.

"Despite this upgrade in our forecast, uncertainty surrounding the trade war and higher-than-expected inflation due in part to increased oil prices could make consumers cautious during the fall season," NRF Chief Economist Jack Kleinhenz said Monday.

Retail sales for the first half of 2018 were up 4.8 percent from a year earlier, NRF said. In the most recent three-months moving average, they have climbed 4.4 percent year over year.

Major retailers including Home Depot, Walmart and Macy's are set to report quarterly earnings this week, which will offer looks at how these companies feel ahead of the all-important holiday season. So far, earnings reports from luxury retailers like Michael Kors and Louis Vuitton owner LVMH have been better than Wall Street was anticipating.

Amazon's annual Prime Day in July is believed to have pulled the back-to-school shopping season even earlier, prompting retailers like Target, J.C. Penney and Kohl's to roll out deals sooner in the summer. The e-commerce giant said this year's Prime Day was its largest yet.