The National Retail Federation (NRF) lowered its retail sales forecast for 2014 because of slow growth recorded during the first half of the year, but predicts sales growth will accelerate over the next five months.
In January, NRF forecast that retail sales would grow 4.1% in 2014 compared to 2013, but last week’s revision lowers that forecast to 3.6%.
NRF calculated that retail sales excluding autos grew 2.9% during the first half of the year and are expected to grow at least 3.9% during the second half.
“No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year’s growth trajectory was impacted,” NRF president and CEO Matthew Shay said. “That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions,” he said, adding, “And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist.”
NRF chief economist Jack Kleinhenz said, “The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us.” He added, “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive. Sales are growing and we expect them to continue at a moderate pace.”
In this month’s members-only Monthly Economic Review, Kleinhenz noted, “…One of the worst winters in recent memory kept shoppers home during the first quarter, and weak numbers for real estate, inventories and exports continued to hamper the economy through the second quarter. However, employment has grown at its strongest pace since 2005, business and consumer confidence have edged higher, manufacturing activity has expanded and inflation pressures remain tame, improving expectations for the second and third quarters.”