The National Retail Federation, the largest U.S. retail trade group, has projected a moderate increase in retail sales for the year. The forecast suggests that retail sales will grow between 2.5% and 3.5% in 2024, a slightly slower pace compared to the 3.6% growth observed last year.
According to the federation, retail sales are expected to reach a total of $5.23 trillion to $5.28 trillion this year, aligning closely with the 10-year pre-pandemic average annual sales growth of 3.6%. The federation's chief economist highlighted the resilience of consumers in driving the economy forward, expressing optimism about consumer spending in the coming months.
The positive outlook is attributed to a robust job market and increasing wages, which have bolstered household spending. However, retail sales have faced challenges due to rising credit costs and inflationary pressures, leading to fluctuations in consumer behavior.
During the pandemic, consumers shifted their spending patterns towards goods while staying at home, but there has been a recent trend towards increased spending on services. This shift has impacted retail sales dynamics, reflecting changing consumer preferences.
Recent data from the Commerce Department indicated a slight uptick in consumer spending in February following a decline in January. While the 0.6% increase in February was below expectations, it suggests a cautious approach by consumers in managing their finances.
The retail group's forecast focuses on the core retail sector, excluding automobile dealers, gasoline stations, and restaurants. The projection for 2024 retail sales is based on comprehensive economic modeling that considers various factors such as employment levels, wage trends, consumer confidence, disposable income, credit conditions, historical sales data, and weather patterns.
