Subscribe to our free, weekly email newsletter!


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%.
February 11, 2016

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.

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!

Recent Entries

Despite advances in process automation, vital business processes consisting of data-driven tasks such as collecting, reviewing, and inputting information still exist in most organizations. These tasks are mundane, repetitive and... okay, boring.

Pressure-senstitive labeling machinery company expands Accraply's products and markets.

The new tire handling systems group will offer a variety of services including design engineering, project management, site supervision, controls, software, automated storage and retrieval, and custom manufacturing solutions specific to the tire industry.

New facility to house more than 300 engineers, project managers, sales, customer service and administrative staff.

Material handling parts distributor acquires Mid-Atlantic industrial safety distributor.

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


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA