US retail sales to top $3.8T in '19, but trade conflicts may weigh: NRF

U.S. retail sales are expected to grow by between 3.8 to 4.4 percent to more than $3.8 trillion in 2019, despite pressure from ongoing trade conflicts and the lingering impact of the partial government shutdown, according to National Retail Federation data released Tuesday.

Retail sales are expected to grow at a slower rate than last year, when they grew by 4.6 percent to $3.68 trillion, according to preliminary NRF estimates. The trade group called on government officials to put an end to political conflicts that could limit the industry’s returns in 2019.

“We believe the underlying state of the economy is sound,” NRF President and CEO Matthew Shay said. “More people are working, they’re making more money, their taxes are lower and their confidence remains high. The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds. It’s time for artificial problems like trade wars and shutdowns to end, and to focus on prosperity not politics.”

The Trump administration has yet to resolve lingering trade disputes with China and European Union. Market pressures compounded when a dispute between Trump and top Democratic leaders over border security funding led to the longest government shutdown in U.S. history.

The Congressional Budget Office estimated last month that the shutdown, which caused roughly 800,000 federal workers to go weeks without pay, may have permanently erased $3 billion from the U.S. economy.

The NRF said its 2018 estimates were based on Commerce Department data through November. The group substituted its own estimates for December because of a delayed release of statistics owing to the shutdown.

“We are not seeing any deterioration in the financial health of the consumer,” NRF Chief Economist Jack Kleinhenz said. “Consumers are in better shape than any time in the last few years. Most important for the year ahead will be the ongoing strength in the job market, which will support the consumer income and spending that are both key drivers of the economy. The bottom line is that the economy is in a good place despite the ups and downs of the stock market and other uncertainties. Growth remains solid.”

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The report said that U.S. retailers have largely avoided a negative impact from the Trump administration’s tariffs conflict with China. But the NRF warned that the tariffs could weigh on results in 2019 – especially if Trump follows through on threats to increase tariffs on $200 billion in Chinese goods to 25 percent from 10 percent.