Retailers might want to rejoice!
Because consumer spending is expected to be higher than anticipated in 2016, with sales growing at a rate of 3.4 percent instead of the previously forecasted 3.1 percent, the National Retail Federation said on Tuesday (July 26).
The higher-than-expected growth is being fueled in part by online and other types of non-store sales purchases, which are expected to jump between 7 and 10 percent in 2016, up from the previously forecasted 6 to 9 percent increase.
“Economic indicators are showing positive trends for retail,” NRF President and CEO Matthew Shay said in a statement. “Challenges remain, with some greater than others, depending on the retail category, but consumer confidence remains high, and we believe that retail customers will continue the positive trends we have seen in the first two quarters of the year.”
Shay said factors, including the improved housing market, job and wage growth and an increasingly positive outlook on the economy by most consumers, were all helping to fuel growth and boost consumer spending.
In the first quarter of 2016, retail sales grew at a pace of about 4 percent. The NRF also expects the gross domestic product to grow for the year between 1.9 and 2.4 percent.
“There are many factors that could prove to be hurdles, but our overall outlook is optimistic,” NRF Chief Economist Jack Kleinhenz said in a statement. “Uncertainty surrounding the presidential election could make consumers more cautious, and the combination of a rising dollar and global slowdown have impacted exports, but other factors, like favorable weather patterns that will help move winter merchandise, support our outlook.”
The NRF, the world’s largest retail trade association, said it will next update its economic forecast for 2016 when it releases its holiday shopping season projections in October and the annual prediction could be reassessed at that time if economic conditions were to change.