As a result of low economic growth in the first half of 2015, the National Retail Federation (NRF) has reduced its annual retail forecast. Initially, NRF predicted that retail sales would grow 4.1% year over year, but today’s revision lowers the forecast to 3.5%.
“A confluence of events, including treacherous weather throughout the United States through most of the winter, issues at the West Coast ports, a stronger U.S. dollar, weak foreign growth and declines in energy sector investments all significantly and negatively impacted retail sales so far this year, and thus have changed how future sales will shape up for the rest of 2015,” said Jack Kleinhenz, Chief Economist for the NRF. “Additionally, household spending patterns appear to have shifted purchases toward services and away from goods, though this may be transitory. Additionally, a deflationary retail environment has been especially challenging for retailers’ bottom lines.”
During the first half of 2015, retail sales increased by only 2.9%, according to NRF calculations. However, growth is expected to accelerate over the remaining five months, with sales improving by 3.5%. NRF’s estimations include general retail sales and non-store sales, and exclude restaurants, gas stations and automobile sales.
Although Kleinhenz pointed to a series of natural and foreign issues as the cause of NRF’s altered retail outlook, NRF President and CEO Matthew Shay indicated that the U.S. government also contributed to the shift.
Washington has spent too much time “crafting rules and regulations that almost guarantee negative consequences for consumers and American businesses alike,” Shay said. “Until the government and our elected leaders get serious about enacting policies that lift consumer confidence, create economic growth and spur investment, we will continue this trend of solid, but not exceptional, performance in the economy.”