After an impressive holiday period in which retail sales grew by 14.1% year-over-year, the near-term future looks strong again for the retail sector this year. In its latest annual forecast, the NRF has predicted growth of 6-8%, considerably higher than the 10-year pre-pandemic average of 3.7%.
Still, this year’s forecast growth rate, while in line with the 6.5-8.2% increase expected at this time last year, would fall well below the 14% figure registered last year, per the NRF’s figures. That surge was the highest growth rate in more than 20 years, according to the retail group. Nonetheless, a solid growth expectation after a big increase suggests bullishness around consumer spending. (It should be noted that survey data indicates that people will be spending more on necessities and less on disposable items.)
Meanwhile, per the NRF analysis, “household finances are healthy and strong job and wage growth should support solid growth for consumer spending for 2022.” That’s despite the obvious uncertainties surrounding COVID-19, war, and inflation (in no particular order). Policy and economic issues – such as monetary policy tightening, less fiscal stimulus, and inflation – should combine to slow GDP growth to roughly 3.5%, per the report.
All told, retail sales (excluding those from automobile dealers, gasoline stations and restaurants) are projected to land somewhere between $4.86 trillion and $4.95 trillion. Non-store and online sales are expected to grow by 11-13%, totaling between $1.17 trillion and $1.19 trillion, which would suggest these accounting for somewhere around 23.6-24.5% of total retail sales.