This year, sales at U.S. retailers are positioned to outdo expectations on higher income, tight labor market and tax reform package from President Trump’s administration. This surely puts the spotlight on retailers that are poised to make the most of the anticipated sales uptick.
NRF Lifts 2018 U.S. Retail Sales Forecast
On Aug 13, the National Retail Federation (NRF) said that it expects retail sales to climb higher than what had been earlier projected. Spending at retailers for this year — excluding automobiles, gasoline stations and restaurants — is predicted to grow 4.5% year over year. The trade organization had projected a modest growth range of 3.8% to 4.4% in February.
NRF asserted that for the first half of this year, retail sales improved 4.8% over the same period last year in spite of a poor show in January. In the most recent three-month moving average, retail sales ticked up 4.4% year over year.
The retail sectors’ rebound has been apparent on Wall Street as well, with Macy’s, Inc. (M – Free Report) stock rising 52.3% this year. Meanwhile, Nordstrom, Inc. (JWN – Free Report) is trading near its 52-week high of $54.61 and several retail ETFs are hitting record highs.
Matthew Shay, NRF president and CEO, said that “higher wages, gains in disposable income, a strong job market and record-high household net worth have all set the stage for very robust growth in the nation’s consumer-driven economy.” He added that “tax reform and economic stimulus have created jobs and put more money in consumers’ pockets, and retailers are seeing it in their bottom line. We knew this would be a good year, but the first half turned out to be even better than expected.”
Having said that, he did emphasize that looming tariff threats might be a concern for retailers. Tariffs of 25% on $34 billion worth of Chinese goods had already taken effect last month, with tariffs on another $16 billion slated to take effect this month. Then again, both the lists include comparatively lesser number of consumer products.
Factors That Will Boost Spending
Disposable personal income increased $167.5 billion, or 4.5% in the second quarter, which followed a gain of $256.7 billion or 7% in the first quarter. The recent jobs report also painted a pretty picture of an economy with opportunities for almost everyone.
The U.S. economy added 157,000 new jobs in July and has risen for 94 successive months, the longest streak on record. The economy, at the same time, created 59,000 more jobs in May and June than earlier reported. Thus, the average gains for the three-month period came in a solid 224,000.
The jobless rate, in the meantime, dropped to 3.9%. This is the eighth time that the unemployment rate has fallen below the 4% mark…