Eye on Retail: Here's the NRF forecast
The National Retail Federation’s annual retail industry sales forecast for 2023 predicts a slower increase than 2022. But it will be better than average.
The forecast, released this week by the largest retail trade group, predicts retail sales to grow between 4 percent and 6 percent. That growth rate is below the 2022 figure of 7 percent, but ahead of the pre-pandemic average annual retail sales growth rate of 3.6 percent.
Note: NRF’s calculation of retail sales excludes automobile dealers, gasoline stations and restaurants to focus on core retail.
Non-store and online sales, which are included in the total figure, are expected to grow between 10% and 12% year over year to a range of $1.41 trillion to $1.43 trillion. While many consumers continue to utilize the conveniences offered by online shopping, much of that growth is driven by multichannel sales, where the physical store still plays an important component in the fulfillment process. As the role of brick-and-mortar stores has evolved in recent years, they remain the primary point of purchase for consumers, accounting for approximately 70% of total retail sales.
NRF projects full-year GDP growth of around 1%, reflecting a slower economic pace and half of the 2.1% increase from 2022. Inflation is on the way down but will remain between 3% and 3.5% for all goods and services for the year.
Although the labor market has remained resilient, the trade organization anticipates job growth to decelerate in the coming months in lockstep with slower economic activity and the prospect of restrictive credit conditions. The unemployment rate is likely to exceed 4% before next year.
NRF Chief Economist Jack Kleinhenz noted that aggregate economic activity has held up well, despite restrictive monetary policy that is working purposefully to curb inflation. He also acknowledged that recent developments in the financial markets and banking sector as well as some unresolved public policy issues complicate the outlook.
“While it is still too early to know the full effects of the banking industry turmoil, consumer spending is looking quite good for the first quarter of 2023,” Kleinhenz said. “While we expect consumers to maintain spending, a softer and likely uneven pace is projected for the balance of the year.”
