The first forecast for overall U.S. retail sector sales growth for 2024 is in, and it reflects a more moderate view of growth for the year ahead amid a cooling economy, reduced inflation and fewer new jobs.
The National Retail Federation (NRF) forecasted that 2024 retail sales would increase between 2.5 percent and 3.5 percent year-over-year, between $5.23 trillion and $5.28 trillion. The NRF’s 2024 sales forecast compares to the 3.6 percent annual sales growth to $5.1 trillion in 2023. The organization’s 2024 forecast aligns with the ten-year pre-pandemic average annual sales growth of 3.6 percent.
“The resiliency of consumers continues to power the American economy, and we are confident there will be moderate but steady growth through the end of the year,” NRF President and CEO Matthew Shay said. “Successful retailers offer consumers products and services when, where, and how they want to shop with prices they want to pay.”
The total figure includes non-store and online sales, which are expected to grow between 7 percent and 9 percent YoY to $1.47 trillion to $1.50 trillion. This compares with non-store and online sales of $1.38 trillion in 2023.
NRF projects full-year GDP growth of around 2.3 percent, a slower level than the 2.5 percent in 2023 but strong enough to sustain job growth.
The NRF also expects inflation prices to moderate to 2.2 percent on a year-over-year basis due to a cooling economy, better balance in the labor and product markets and retreating housing costs.
“The economy is primarily supported by consumers who have shown much greater resilience than expected, and it’s hard to be bearish on the consumer,” NRF Chief Economist Jack Kleinhenz said. “The question for 2024 ultimately is, will consumer spending maintain its resilience?”
With robust job growth and wage gains fueling consumer spending, a tight labor market is expected to cool in 2024. With the pace of the economy slowing in 2024, NRF expects about 100,000 fewer jobs per month on average compared with 2023, and the unemployment rate is expected to average 4 percent for the full year.
Kleinhenz also noted that consumer balance sheets and debt servicing levels remain in good condition. Rising home and stock prices in 2023 likely stimulated greater consumer spending via the so-called wealth effect, and this should continue in 2024.
Several surveys found that consumers have a favorable outlook, which should also support their willingness to spend. Yet, many are feeling a pinch from tighter credit and inflation.
The NRF provides monthly data on retail sales and forecasts annual retail sales and spending for key periods, such as the holiday season. The organization’s calculation of retail sales excludes auto dealers, gas stations and restaurants to focus on core retail.
The NRF based its 2024 retail sales forecast on economic modeling that considers various indicators, including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales, and weather.
The NRF produces forecasts and other analyses using data from various U.S. government sources, including the CNBC/NRF Retail Monitor powered by Affinity Solutions.
