Retailers expect strong year, barring any new trade wars
Retail is on track for another strong year in 2019 — barring, say, a ramped-up trade war or another government shutdown.
The 35-day government shutdown has kept the industry from getting a complete view of consumer spending at the end of 2018. Still, the National Retail Federation on Tuesday estimated that 2018’s retail sales grew 4.6 percent over 2017, hitting $3.68 trillion. That figure topped the NRF’s forecast of 4.5 percent growth for the year.
There’s reason to expect a repeat in 2019. Wages are increasing, consumer confidence is high, unemployment is low. The NRF expects this year’s retail sales to increase 3.8 percent to 4.4 percent over last year, to more than $3.8 trillion.
But industry experts are quick to qualify the good news. With so much uncertainty swirling around President Donald Trump’s trade war, a volatile stock market and the government shutdown, it’s possible that sales could start to sag. Matthew Shay, the NRF’s president and CEO, said Trump and other elected officials should be wary not to alarm shoppers during what could otherwise be a strong year for retail.
“Consumers will spend as long as they’re confident about the future of the economy,” Shay said. “It’s timely in some ways that today is the same day the president will deliver the State of the Union.”
Retailers have been front and center in condemning Trump’s tariffs since early last fall. Big box retailers such as Walmart and Target cautioned that tariffs on Chinese goods could force them to raise prices. The Retail Industry Leaders Association, an industry lobbying group, argued that any tariffs on consumer goods were nothing more than a hidden tax.
Those concerns aren’t going away. If tariffs on $200 billion in Chinese goods rise from 10 to 25 percent on March 1, customers could see price increases and businesses could lose profits, said Jack Kleinhenz, the NRF’s chief economist.
Kleinhenz said the precise impact of the shutdown is hard to measure. First-quarter spending could be affected by a backlog in tax returns from the IRS. But January sales can be tricky to splice anyway. Weather issues could affect shopping habits, for example.
The shutdown “doesn’t have, at this point, a large impact that we know of on spending,” Kleinhenz said.
The NRF’s holiday figures fell in line with sales data from just after Christmas. MasterCard SpendingPulse, which tracks retail spending trends, said holiday sales had seen the strongest growth in the past six years, surging 5.1 percent to more than $850 billion. Amazon touted strong sales on millions of Amazon Devices and broad use of the company’s free holiday shipping perks.
But come January, not all retailers had reason to cheer. At Macy’s, sales at stores open for at least a year climbed 1.1 percent in November and December. Macy’s Chairman and CEO Jeff Gennette said sales over Black Friday and Cyber Week started off strong. But that momentum fell off before Christmas “and did not return to expected patterns until the week of Christmas,” Gennette said.