Connect with us

Press Releases

NRF Says Economy Remains ‘Sturdy’ Despite Forecast for Slower Growth

“Consumers’ behavior and spending power are tied to their financial health, and the consumer sector looks good at the moment.”

mm

Published

on

(PRESS RELEASE) WASHINGTON, DC – Despite expectations for slower growth of both gross domestic product and retail sales, the economy should continue to do well the remainder of this year, National Retail Federation Chief Economist Jack Kleinhenz said today.

“No one can accurately forecast what surprises the next year might hold, but the foundation of the economy is relatively sturdy and still on a sustainable path,” Kleinhenz said, adding that the continuing recovery remains “highly reliant” on consumer spending. “Barring unexpected shocks, it should continue growing in 2024, although not spectacularly.”

“No one could have imagined when the COVID-19 recession ended in April 2020 that we would have experienced such a resilient expansion that is now headed toward its fifth year,” he said.

Kleinhenz’s comments came in the April issue of NRF’s Monthly Economic Review, which noted that NRF forecast last month that 2024 retail sales will grow between 2.5% and 3.5% in 2024. While that marks a slowdown from the unusually rapid growth seen since the pandemic, the projection is in line with the 10-year pre-pandemic average of 3.6%. Overall economic growth is expected to be modest, but consumer spending should hold up as inflation slows gradually and job growth remains positive even as unemployment rises.

Adjusted for inflation, GDP is expected to grow about 2.3% year over year, slower than last year’s 2.5% but still strong enough to sustain job growth that drives consumer spending. Consumer spending is expected to be up about 2%, which compares with 2.3% last year.

“Consumers’ behavior and spending power are tied to their financial health, and the consumer sector looks good at the moment,” Kleinhenz said.

Advertisement

While wage growth should ease toward 3.5% by the end of the year and employers should create about 100,000 fewer new jobs each month, disposable personal income was up 4.1% year over year in February. Rising home and stock prices outpaced inflation in 2023, helping boost household wealth by 8% year over year in the fourth quarter and stimulating consumer spending via the “wealth effect,” which should carry over into 2024. While many consumers are feeling a pinch from tighter credit and inflation, the Federal Reserve Bank of New York reported in February that more consumers said it was easier to access credit than a year ago, and the University of Michigan said consumer confidence reached its highest level since July 2021.

Nonetheless, NRF is watching payroll and income data “very closely” since the slower job and wage gains are key factors behind the slower growth expectations for GDP and spending.

Meanwhile, a combination of moderating wage growth, supply chain healing, slightly weaker consumer demand and higher interest rates have helped bring down inflation meaningfully. While there was a slight reacceleration in prices at the start of 2024, Kleinhenz expects inflation to steadily move down and be at 2.2% year over year by the end of the year.

Interest rates could also be on their way down. Citing remarks by Fed Chairman Jerome Powell last month that the economy has made “considerable progress” and that inflation “has eased substantially,” Kleinhenz expects the Fed to hold rates steady until June, when it will likely cut rates a quarter of a percentage point. Subsequent cuts in September and December could bring the total reduction to three-quarters of a percentage point.

As the leading authority and voice for the retail industry, NRF analyzes economic conditions affecting the industry through reports such as the Monthly Economic Review.

Advertisement

SPONSORED VIDEO

Retiring? Let Wilkerson Do the Heavy Lifting

Retirement can be a great part of life. As Nanji Singadia puts it, “I want to retire and enjoy my life. I’m 78 now and I just want to take a break.” That said, Nanji decided that the best way to move ahead was to contact the experts at Wilkerson. He chose them because he knew that closing a store is a heavy lift. To maximize sales and move on to the next, best chapter of his life, he called Wilkerson—but not before asking his industry friends for their opinion. He found that Wilkerson was the company most recommended and says their professionalism, experience and the homework they did before the launch all helped to make his going out of business sale a success. “Wilkerson were working on the sale a month it took place,” he says. “They did a great job.”

Promoted Headlines

Advertisement

Advertisement

Advertisement

Subscribe


BULLETINS

INSTORE helps you become a better jeweler
with the biggest daily news headlines and useful tips.
(Mailed 5x per week.)

Facebook

Latest Comments

Most Popular