NRF estimates 3.1% annual hike in 2016 retail sales but economic worries persist

Estimate comes in higher than the 10-year average of 2.7%, but falls short of the NRF’s 2015 estimate of 4.1%.

By ·

As we all know, when it comes to the economy, it goes something like this: “the economy is as strong as consumer spending is” or something to that effect. That long-standing sentiment remains as accurate as ever, considering that consumer spending accounts for roughly two-thirds of total United States economic output and possibly even a tad more than that.

Another thing we all know, especially those in the logistics and transportation sectors, is that the direct impact of consumer spending on all aspects of supply chain operations is not to be understated by any stretch. When things are good, inventories are lean, demand is high, transportation capacity is pretty tight, and warehouse and distribution activity is bustling. And when those things are not happening, it is something else….something else that is not good more often than not.

That is what brings me to data issued this week regarding 2016 retail sales from the National Retail Federation (NRF). The NRF is calling for 2016 retail industry sales, excluding automobiles, gas stations, and restaurants, to see a 3.1 percent annual increase.

While this estimate comes in higher than the 10-year average of 2.7 percent, it falls short of the NRF’s 2015 estimate of 4.1 percent. The Washington, D.C.-based organization also said it expects non-store sales to grow between 6-9 percent in 2016.

NRF chief economist Jack Kleinhenz was optimistic in throwing support behind the NRF’s 2016 forecast.

“The economy had a bumpy ride in 2015 with fits and starts along the way,” he said. “Despite the volatility, the economy continued to reduce unemployment, raise wages and actually increase real GDP by 2.4 percent. Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services. Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment.”

The NRF offered up some other metrics that it maintains point to a strong 2016 on the retail sales front, including:
● 2016 economic growth to be in the 1.9 percent-to-2.4 percent range; and
● an estimated 190,000 new jobs added per month, which is off from 2015 but consistent with a growing labor market

What’s more, the NRF said that more jobs equates into more income that means more retail spending. But is added that growth in spending is expected to come from jobs growth as opposed to higher wages.

While the NRF’s forecast is replete with a healthy does of optimism, it goes without saying that current economic conditions are far from ideal on both a global and macro level.

Examples of this include things like uneven stock market activity; low gas prices not translating into more consumer spending; geopolitical issues; high inventories; flattish GDP growth; and declining manufacturing output, among others.

This is in no way to diminish the NRF’s forecast, which looks to be pretty realistic over all, especially when looking at how economic worries are clearly not preventing U.S. consumers from spending healthy amounts on eating at restaurants and beverages, as well as strong auto sales, too.

But at the end of the day, there is not one clear thing that raises the economic tide, and that is why we need both our oars in the water to navigate the always challenging economic tides once again in 2016.


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

Subscribe to Modern Materials Handling Magazine!

Subscribe today. It's FREE!
Find out what the world’s most innovative companies are doing to improve productivity in their plants and distribution centers.
Start your FREE subscription today!

Latest Whitepaper
Capturing Labor, Space, and Accuracy Returns with AS/RS
Find out how the demand of e-commerce and digital age expectations are driving the need to automate material handling with AS/RS solutions to improve labor productivity, save space, and reduce costs associated with inaccurate picks
Download Today!
From the November 2017 Modern Materials Handling Issue
A new facility, iPhones and a new WMS allowed cookware manufacturer Lodge to double its business for the fourth time in 20 years and shorten order delivery time from 10 days to three.
10th Annual Salary Survey: The Price of Performance
Let’s put Automatic Data Capture (ADC) Technology to Work
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
The State of the DC Voice Market
A lot has changed in the last 10 years, especially in voice technology. This webinar will cover the state of the voice market, review two leading voice solutions and help you gain a better understanding of the options and capabilities available today.
Register Today!
EDITORS' PICKS
Lodge Manufacturing: Distribution Cast in Iron
A new facility, iPhones and a new WMS allowed cookware manufacturer Lodge to double its business for...
Rochester Drug Cooperative: Robots ready for work
It’s still early stages, but Rochester Drug Cooperative is proving that mobile robotic piece...

System Report: Pouch sorter powers Stage’s fulfillment needs
How a hometown department store chain transformed its e-fulfillment processes with pouch sortation...
Cubing and Weighing Equipment: Measure Up
The use of cubing and weighing equipment is growing beyond dimensional weight applications.