NRF slightly lowers 2017 retail sales forecast

With consumer spending directly responsible for roughly two-thirds of all United States economic activity, it stands to reason it is, and, really, always has been and will remain to be, a key economic indicator.

So, when an influential organization like the Washington, D.C.-based National Retail Federation (NRF) rolls out changes in its forecast for 2017 retail sales, as it did yesterday, it requires some attention.

So, what did NRF announce exactly? A slightly lower 2017 retail sales estimate is the answer, with NRF stating 2017 retail sales are expected to increase between 3.2%-3.8%, as opposed to its forecast of 3.7%-4.2% earlier this year.

“Meaningful revisions to retail sales numbers by the Census Bureau and similar revisions to personal income and consumption by the Bureau of Economic Analysis have both affected our forecast and have required us to adjust our 2017 sales projection,” NRF Chief Economist Jack Kleinhenz said in a statement. “While weaker-than-expected spending in the first quarter along with decelerating inflation has also contributed to the revision, NRF anticipates stronger sales heading into the fall and holiday seasons.”

What’s more, the NRF executive added that total retail sales are up annually for each month going back to November 2009, and he also said that retail sales as calculated by NRF — which excludes automobiles, gasoline stations and restaurants — have gone up year-over-year in all but one month since the beginning of 2010.

It is important to keep in mind that a fair amount of these increases have been a matter of basis points, but it may be considered more important that it remains heading in the right direction, too.

And let’s also not forget that it is well known that, as mentioned above, retail sales represent somewhere around two-thirds of all economic activity, and that U.S. retail sales contribute around 14 percent, or $2.6 trillion to U.S. GDP. That is a major number and clearly cannot be overlooked, especially when looking at how closely connected retail and consumer activity is tied to the freight transportation and logistics sectors on so many fronts, including trucking, intermodal, parcel, ocean, air, and e-commerce.

When NRF made its initial retail sales estimates earlier this year, it also highlighted these data points, which remain unchanged:

the economy is expected to gain an average of approximately 160,000 jobs a month, which it said is down slightly from 2016 but consistent with labor market growth;
unemployment is expected to drop to 4.6 percent by the end of the year; and
economic growth is likely to be in the range of 1.9 to 2.4 percent

All pretty positive numbers to be sure.

While writing about retail sales numbers in this space a little while back, I came across this observation made by your writer, and I think it bears repeating.

“Retail sales data can obviously be interpreted, sliced, and diced many different ways, but at the end of the day it remains a crucial data point that needs to be monitored and closely watched. Freight and logistics interests more often than not keep it top of mind and that is not something that is likely to change anytime soon.” 

I meant it when I wrote it then, and I don’t see any reason why it still would not, or does not, still hold water now, too. Retail sales influence many supply chain-related functions like inventory management, demand planning, handling capacity, and strategic and operational processes, too. That is never going to go out of style, nor should keeping a close eye on retail sales.