WASHINGTON — The National Retail Federation (NRF) said holiday sales were up 2.9% from a year ago, rising at a slower pace than the association had forecast.
“All signs during the holidays seemed to show that consumers remained confident about the economy,” said NRF president and chief executive officer Matthew Shay. “However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behavior more than we expected. There’s also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable. It’s very disappointing that clearly avoidable actions by the government influenced consumer confidence and unnecessarily depressed December retail sales.”
The last two months of the year can account for between 20% and 40% of annual sales for many retailers.
Looking ahead, NRF forecasts U.S. retail sales growth of between 3.8% and 4.4% in 2019. That would be a slight slowdown from the 4.6% rate of increase in 2018, but sufficient for a 10th consecutive year of increasing retail sales.
“We believe the underlying state of the economy is sound,” Shay said. “More people are working, they’re making more money, their taxes are lower, and their confidence remains high. The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds. It’s time for artificial problems like trade wars and shutdowns to end, and to focus on prosperity, not politics.”
Retailers took in $3.68 trillion in sales revenue in 2018, according to the association’s preliminary estimates. That sum includes online and other nonstore sales, which increased 10.4%, but excludes sales at automotive dealers, gasoline stations and restaurants.
The 2018 results are based on Commerce Department data through November and use NRF estimates for December, when the partial government shutdown delayed the department’s data reporting.
“We are not seeing any deterioration in the financial health of the consumer,” said Jack Kleinhenz, NRF’s chief economist. “Consumers are in better shape than any time in the last few years. Most important for the year ahead will be the ongoing strength in the job market, which will support the consumer income and spending that are both key drivers of the economy. The bottom line is that the economy is in a good place despite the ups and downs of the stock market and other uncertainties. Growth remains solid.”
Kleinhenz foresees inflation and interest rates remaining low in 2019.
Retailers have so far managed to mitigate the impact of new tariffs imposed by the Trump administration on steel, aluminum and other imports from China, NRF said.
But that could change as early as March 1, when U.S. tariffs on $200 billion in Chinese products were scheduled to increase to 25% from 10%. In the run up to that date, however, President Trump hinted he was open to extending the deadline if negotiators from both countries are near an agreement.
On the U.S. side, officials want China to stop allegedly stealing intellectual property from American companies and commit to reforms to a state-driven economic model that they say hurts U.S. competitors.
NRF’s figures for holiday sales were in line with mostly upbeat statements from retailers regarding year-end sales but diverged from Commerce Department data, belatedly released on Valentine’s Day, showing that U.S. retail sales fell 1.2% in December from the previous month, the most since 2009.
Several economists and analysts reacted skeptically to the government’s figures and wondered whether shutdown-related delays in data gathering contributed to problems with the collection.
The most striking discrepancy was in the government’s data showing a 3.9% month-on-month decline in December for nonstore retailers, which include online stores. That was the worst monthly showing since November 2008 and inconsistent with NRF’s report that online and other nonstore sales rose 11.5% in the two-month holiday season, a finding more in line with preseason expectations that digital sales would be a retail bright spot in the holiday season.