The National Retail Federation (NRF), the Washington D.C.-based retail trade association that advocates on behalf of the industry, in March released its annual retail sales forecast for 2023. The report does not include the restaurant, gasoline station or automobile dealership segments of retail, but instead focuses on the core merchandise sector.
As for specific predictions, the NRF forecasts that retail sales will experience growth between 4% and 6% in 2023, with sales to average $5.18 trillion. Although this is a slower rate than last year’s 7% growth, it is a higher percentage than the actual pre-pandemic annual sales growth rate, which averaged 3.6%.
“While we expect growth to moderate in the year ahead, it will remain positive as retail sales stabilize to more historical levels,” said Matthew Shay, president of the NRF. “Retailers are prepared to serve consumers in the current economic environment by offering a range of products at affordable prices with great shopping experiences.”
Even with the decent forecast, the future of retail’s sales still remains on shaky ground. Keep in mind that the NRF’s annual sales forecast assumes that the U.S. banking system won’t experience any severe fluctuations, such as what happened in March when both Silicon Valley Bank and First Republic Bank experienced a run on deposits.
“Consumer confidence, especially with banks, needs to be maintained in order to sustain spending in these uncertain times,” said Jack Kleinhenz, the chief economist for the NRF. “The wildcard is what the Fed will do with interest rates in the coming months.”
Due to this unease, the NRF has projected that the GDP growth will be at 1%, a slower economic pace than last year, which was 2.1%. “I don’t believe the full effect of tightening has shown up,” Kelinhenz said. “In all my years of forecasting, it has never been so challenging to put together the pieces of the economic puzzle and connect them to where the economy is heading. And the disruption and uncertainty are likely to persist.”
