The National Retail Federation (NRF) revealed its 2020 forecast of retail sales increasing between 3.5% and 4.1% to more than $3.9 trillion — even with potential headwinds including the spread of coronavirus, the ongoing trade war with China and the upcoming U.S. presidential election.
Matthew Shay, President and CEO of NRF, credits the continued growth to strong consumer confidence, particularly due to gains in household income, lower interest rates and an unemployment rate that has reached a 50-year low.
The forecast assumes that the coronavirus does not become a global pandemic, but also acknowledges that business confidence and retail sales could be impacted if factory shutdowns in China continue, especially if holiday season merchandise is affected. With coronavirus dominating news headlines and potentially having its biggest impact on supply chains, the topic couldn’t be avoided during the official media briefing.
“I feel we are fortunate we are lagged here in the U.S.,” NRF Chief Economist Jack Kleinhenz said during the briefing. “Coronavirus occurred elsewhere sooner. We have had time to think about it.”
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Another piece of luck: the outbreak is taking place during a strong economy. “If this had happened back in 2007, it probably would have been worse,” said Kleinhenz.
Projected retail sales for 2020 should total between $3.93 trillion and $3.95 trillion. Online sales, which are included in the total, are expected to grow by 12% to 15%, totaling $870.6 billion to $893.9 billion.
According to preliminary NRF results, 2019 retail sales grew 3.7% to $3.79 trillion, just short of the trade association’s forecast of 3.8% to 4.4% growth — a prediction based on incomplete data because of last year’s government shutdown. However, online and non-store sales were up 12.9% at $777.3 billion, beating NRF’s initial forecast of up to 12% growth.
NRF expects the overall economy to gain between 150,000 and 170,000 jobs per month in 2020, compared with an average of 175,000 in 2019. Unemployment — currently at 3.6% — should stay around 3.5%. Gross domestic product (GDP) is likely to grow 1.9%, down from preliminary estimates of 2.3% in 2019.
