WASHINGTON — The National Retail Federation (NRF) said it expects the impact of coronavirus on imports at major U.S. retail container ports will be larger and last longer than previously believed, as factory shutdowns and travel restrictions in China continue to hamper production.
“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” Jonathan Gold, vice president for supply chain and customs policy, noted in a March 9 statement. “As factories in China continue to come back online, products are now flowing again. But there are still issues affecting cargo movement, including the availability of truck drivers to move cargo to Chinese ports. Retailers are working with both their suppliers and transportation providers to find paths forward to minimize disruption.”
Earlier, NRF issued a forecast calling for U.S. retail sales to increase by between 3.5% and 4.1% this year to more than $3.9 trillion, despite uncertainties from coronavirus, the lingering trade war and the presidential election.
The forecast, issued February 26, assumes that coronavirus does not become a global pandemic. The World Health Organization on March 11 announced that coronavirus disease (COVID-19) was officially a pandemic.
In issuing its 2020 retail sales forecast, NRF cited preliminary figures showing that retail sales in 2019 were likely to have increased by 3.7% to nearly $3.8 trillion. The total includes online and other non-store sales, which were up 12.9% at $777.3 billion.
The numbers exclude automobile dealers, gasoline stations and restaurants.
“The nation’s record-long economic expansion is continuing, and consumers remain the drivers of that expansion,” said Matthew Shay, NRF’s president and chief executive officer. “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.”
NRF expects that the overall U.S. economy will gain between 150,000 and 170,000 jobs per month in 2020, compared with an average 175,000 in 2019, and that unemployment should stay around 3.5%. Gross domestic product is likely to grow 1.9%, which would represent a decline from 2019’s growth of 2.3%, a figure that NRF noted is a preliminary estimate and is subject to revision.
“The economy is growing at a more modest pace, but the underlying economic fundamentals remain in place and are positive,” said Jack Kleinhenz, NRF’s chief economist. “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.”
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, Kleinhenz noted, and consumers have been confident enough to use their credit cards or savings to sustain their spending.
While consumers and small business owners are confident, Kleinhenz said 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, he said.