Increase of between 3.7% and 4.2% is projected
NRF’s definition of retail sales excludes automobiles, and money spent at gas stations and restaurants.
“The economy is on firm ground as we head into 2017 and is expected to build on the momentum we saw late last year,” NRF president and CEO Matthew Shay said in a statement. “With jobs and income growing and debt relatively low, the fundamentals are in place and the consumer is in the driver’s seat. But this year is unlike any other – while consumers have strength they haven’t had in the past, they will remain hesitant to spend until they have more certainty about policy changes on taxes, trade and other issues being debated in Congress. Lawmakers should take note and stand firm against any policies, rules or regulations that would increase the cost of everyday goods for American consumers.”
NRF chief economist Jack Kleinhenz argued that consumer spending will depend on employment and wages, with more jobs and more income resulting in more spending.
“Regardless of sentiment, the pace of wage growth and job creation dictate spending,” Kleinhenz said. “Our forecast represents a baseline for the year, but potential fiscal policy changes could impact consumers and the economy. It seems unlikely that businesses will notably increase investment until tax reform and trade policies are well-defined.”
He added that online sales will clearly continue to expand in 2017, providing growth for the retail industry.
“But it is important to realize that virtually every major retailer sells online and many of those sales will be made by discount stores, department stores and other traditional retailers,” Kleinhenz said. “Retailers sell to consumers however they want to buy, whether it’s in-store, online or mobile.”
Other insights from the NRF forecast:
- The economy is expected to gain an average of approximately 160,000 jobs a month. The number is down slightly from 2016 but consistent with labor market growth.
- Unemployment is expected to drop to 4.6% by the end of the year.
- Economic growth is likely to be in the range of 1.9% to 2.4%.
The NRF notes that its forecast for the year’s sales should be seen as a baseline that does not take into account new fiscal measures pending in Washington. Retail industry sales as defined by NRF include most traditional retail categories including non-store sales, discounters, department stores, grocery stores, specialty stores, and auto parts and accessories stores but exclude sales at automotive dealers, gasoline stations, and restaurants. Non-store/online sales include online sales, kiosks, catalogs, etc. and are a breakout of the overall number.