Retail sales in the United States are expected to slacken this year, with trade war fears, stock market volatility and the aftermath of the record-long government shutdown weighing on consumer spending.
According to the National Retail Federation, overall sales are set to climb between 3.8 and 4.4 percent during 2019, adding up to about $3.8 trillion. (The number excludes auto dealers, gas stations and restaurants.)
In August, the NRF projected that retail sales for the year would increase at least 4.5 percent. In the meantime, the trade association is also awaiting full-year 2018 data; overall sales are expected to increase 4.6 percent without the December figures. (The Department of Commerce, which is responsible for releasing the data, stayed closed while President Donald Trump sparred with Democratic politicians about his proposed border wall during the government shutdown.)
The impasse came at a crucial time for investors, who were seeking sales figures following the all-important holiday shopping season. Despite predicting higher spending in 2018’s final two months (largely thanks to Black Friday and Cyber Monday), analysts urged vigilance for 2019 as Wall Street freshly emerges from a brutal end-of-year period that saw the Dow Jones Industrial Average’s worst December since the Great Depression.
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Still, the NRF insisted that “the underlying state of the economy is sound,” with 2019 forecasted to be the 10th consecutive annual growth in retail sales.
“Consumers are in better shape than any time in the last few years,” NRF chief economist Jack Kleinhenz said in a statement. “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.”
A fair amount of unpredictability stems from the trade war between the U.S. and China, which are less than a month to the deadline in their 90-day financial ceasefire. If the world’s two largest economies fail to reach a deal by March, the White House has promised to raise tariffs from 10 percent to 25 percent on $200 billion worth of Chinese goods.
Even though investors are concerned that China’s decelerating economic growth could impact global markets, NRF president and CEO Matthew 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.”
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