Retail sales in 2017 are expected to grow roughly in line with last year’s 3.8 percent gain, as rising wages, lower unemployment and a solid housing market drive consumer confidence higher.
However, with many tax and trade policies still up in the air under the Trump administration, consumers are expected to continue being methodical with their spending.
The National Retail Federation on Wednesday projected that industry sales will grow between 3.7 and 4.2 percent this year, excluding automobiles, gasoline stations and restaurants. That’s roughly in line with the 3.8 percent increase in 2016, as reported by the NRF.
Online and other non-store sales are expected to increase between 8 percent and 12 percent.
The organization’s forecast does not include potential legislation that could come from Washington, D.C., including the controversial border adjustment tax.
“We think that consumers will remain thoughtful, circumspect, [and] even a bit hesitant to spend until they really have more certainty about the strength of the economy” and government policies, NRF CEO Matt Shay said.
Yet with the economy on more solid footing and consumer confidence near 15-year highs, he added there’s “great potential for this all to come together very positively.”
The NRF’s forecast comes as retailers are eyeing the potential impacts of a border adjustment tax, a GOP proposal that threatens to slap a 20 percent tax on goods they import and sell in the U.S. The industry has banded together to fight the tax, which they argue could wipe out their earnings and raise prices for consumers.
A recent analysis by Ernst and Young, commissioned by the NRF, found that the proposal could cost the average American family $1,700 in the first year alone, as prices go up on everything from apparel to gasoline.
Proponents of the tax counter that it would cause the value of the dollar to increase, and consumers therefore would not be left footing the bill.
“Our forecast represents a baseline for the year, but potential fiscal policy changes could impact consumers and the economy,” NRF Chief Economist Jack Kleinhenz said. “It seems unlikely that businesses will notably increase investment until tax reform and trade policies are well-defined.”
The NRF’s forecast follows a tumultuous holiday season for many retailers. Though the trade organization said that sales increased 4 percent in November and December — topping its prediction of 3.6 percent growth — major retailers from Macy’s to Under Armour reported disappointing results.
Last February, the NRF predicted retail sales would increase 3.1 percent during the year. The trade group then raised its growth forecast to 3.4 percent in July, citing a better housing market, job growth, higher wages and a greater-than-expected lift in online sales.