One of the biggest drivers of the U.S. economy is expected to grow between 3.8% and 4.4% this year over 2017, according to a new economic forecast from the trade group the National Retail Federation.
NRF has also forecast online and other non-store sales, which are included in the overall number, are expected to increase between 10% and 12%. The numbers exclude automobiles, gasoline stations and restaurants.
Retail sales grew 3.9% in 2017 over 2016 to $3.53 trillion, according to the U.S. Census bureau’s preliminary estimate for the year. The number is subject to revision but exceeded NRF’s earlier forecast for growth between 3.2% and 3.8%.
“A robust holiday season for retail sales is just one of many barometers that points to a consumer that is clearly feeling positive about their financial health,” said NRF President and CEO Matthew Shay said. “With consumer confidence high, unemployment low and wages growing, there is every reason to believe that retail sales will be robust throughout the year.”
According the NRF Chief Economist Jack Kleinhenz, the basis of the forecast is the underpinnings of the economy are very good and consumer spending is at the center of the group’s outlook.
“The push and pull of forces both external and internal to the U.S. economy will continue to provide challenges, but on balance we expect a good year,” he said. “And as the retail industry continues to transform, retailers will leverage the new tax plan to invest in their employees, stores and new formats that engage with the ever-evolving and demanding consumer.”
NRF has also forecast the overall economy is expected to gain an average of 163,000 jobs a month this year, down slightly from 2017, but the group said this is consistent with labor market growth
Also, unemployment is expected to drop to a rate of 3.9% by the end of the year. This compares to a 4.1% rate in January, which is the latest published figure by the Labor Department.
Gross domestic product growth, NRF said, is likely to be in the range of 2.5% to 3% for 2018. It was 2.3% for all of 2017 compared to the year before, up from an increase of 1.5% in 2016 over 2015.