News

Report: 2016 will deliver healthy sales growth for retail sector

Cheap gas, more jobs and consumer confidence will lead to robust retail sales in 2016.

February 11, 2016

Retail sales will grow 1.3 percent this year, a healthy spike above the decade-average of 2.7 percent, and lower gas prices, new jobs and consumer confidence are the prime drivers.

The National Retail Federation 2016 economic forecast, released Wednesday, also predicts non-store sales this year will increase between 6 and 9 percent.

"The consumer is in the driver’s seat and steering our economic recovery. The best thing the government can do is stay out of the way," stated NRF President and CEO Matthew Shay.

"Wage stagnation is easing, jobs are being created and consumer confidence remains steady, so despite the headwinds our economy faces from international developments — particularly in China — we think 2016 will be favorable for growth in the retail industry," he added.

This year the consumer is in the driver's seat and steering the recovery, according to NRF leader.

"The best thing the government can do is stay out of the way, stop proposing rules and regulations that create hurdles toward greater capital investment and focus on policies that help retailers provide increased income and job stability for their employees."

Noting that last year was a bit of a "bumpy ride," NRF Chief Economist Jack Kleinhenz cites decreasing gas prices, less unemployment and wage increases are all playing a role in the growth expectation,

"Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment," he stated.

The report also cites the following predictions:

• Economic growth should be more of the same and uneven. It is likely to be in the range of 1.9 to 2.4 percent in 2016.

• Employment gains of approximately 190,000 on an average monthly basis are expected. While that pace is down from 2015, it is consistent with the labor market growing near its underlying trend. By year end, unemployment should drop to 4.6 percent.

• Prospects for consumer spending are straightforward — more jobs equals more income, which equals more spending. However, spending will come largely from the growth in jobs and not as much from increased wages.