NRF Forecasts Another Strong Year of Retail Sales Growth

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Retail sales could grow as much as 8% in 2022, according to the National Retail Federation (NRF), which offered its annual forecast as part of its State of Retail & The Consumer report. 

Despite consumers facing economic headwinds including high gas prices and inflation, NRF officials said retail sales could top out at $4.95 trillion. This figure excludes automobile dealers, gas stations and restaurants. 

Non-store and online sales year-over-year, which are included in the total figure, are expected to grow between 11% and 13% to a range of $1.17 trillion to $1.19 trillion as consumers continue to utilize e-commerce.

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“NRF expects retail sales to increase in 2022, as consumers are ready to spend and have the resources to do so,” said Matthew Shay, NRF President and CEO. “We should see durable growth this year given consumer confidence to continue this expansion, notwithstanding risks related to inflation, COVID-19, and geopolitical threats.”

The 2022 figure compares with 14% annual growth rate in 2021, the highest growth rate in more than 20 years. This year’s sales forecast is notably above the 10-year, pre-pandemic growth rate of 3.7%.

NRF anticipates strong job and wage growth and declining unemployment. The organization projects full-year GDP growth will be slower this year, around 3.5%, given the surge of inflation and tightening of monetary policy, and less fiscal stimulus.

Retail sales are expected to remain strong as the economy opens further in the coming months, but there is considerable uncertainty this year that NRF will continue to monitor closely.

“Most households have never experienced anything like this level of inflation, and it is expected to remain elevated well into 2023,” said Jack Kleinhenz, NRF Chief Economist. “In addition to inflation, the forces impacting the economy include COVID-19 impacts, international tensions and policy variability.”

Kleinhenz added that although a roller coaster ride of incoming data is expected in the next few months, consumer fundamentals remain in place. Household finances are healthy and strong job and wage growth should support solid growth for consumer spending for 2022.