The National Retail Federation (NRF) Chief Economist Jack Kleinhenz stated that despite predictions for slower growth in both GDP and retail sales, the economy is expected to continue performing well in the coming months. He emphasized that the foundation of the economy remains solid and on a sustainable path, with consumer spending being a key driver of the ongoing recovery.
In its April Monthly Economic Review, the NRF forecasted that retail sales would grow between 2.5% and 3.5% in 2024, indicating a gradual slowdown compared to the rapid growth seen during the pandemic. This is in line with the 10-year pre-pandemic average of 3.6%. While overall economic growth is expected to be modest, consumer spending is anticipated to remain strong as inflation eases and job growth stays positive despite rising unemployment rates.
GDP is projected to grow by about 2.3% year-over-year when adjusted for inflation, which is a slower rate than last year’s 2.5% but still sufficient to support job growth and consumer spending. Consumer spending is expected to increase by around 2%, down slightly from last year’s 2.3%. Kleinhenz highlighted the connection between consumers’ financial health and spending power, noting that the consumer sector currently looks promising as the economy experiences a resilient expansion heading toward its fifth year.
The NRF also noted a meaningful decrease in inflation, attributed to factors such as moderated wage growth, a more stable supply chain, lower consumer demand, and increased interest rates. While inflation slightly increased at the beginning of 2024, Kleinhenz anticipates a steady decline, with inflation reaching 2.2% year-over-year by year-end. This decrease in inflation could prompt a reduction in interest rates, with Kleinhenz predicting the Federal Reserve to hold rates steady until June, followed by quarter-point rate cuts in September and December.
Overall, while economic growth may not be spectacular this year
