Retail sales growth in the U.S. could be cooling off in 2019, as a trade war with China and spillover effects from the recent partial government shutdown hang like a dark cloud over the industry.
The National Retail Federation is calling for retail sales, excluding automobile dealers, gasoline stations and restaurants, to climb between 3.8 and 4.4 percent this year, amounting to as much as $3.84 trillion.
That would be less than growth of 4.6 percent in 2018, which NRF says is its preliminary estimate for retail sales last year, pending the release of December data from the Commerce Department that was stalled from being announced during the government shutdown. NRF in August of last year said it expected 2018 retail sales to be up at least 4.5 percent.
Still, "despite threats from an ongoing trade war, the volatile stock market and the effects of the government shutdown," according to NRF CEO Matt Shay, "the underlying state of the economy is sound."
"The biggest priority is to ensure that our economy continues to grow and to avoid self-inflicted wounds," Shay said. On a call Tuesday morning with members of the media, he added, "We shouldn't talk ourselves into a recession."
NRF said in a press release that online and other nonstore sales were up 10.4 percent in 2018, amounting to $682.8 billion. And the group is calling for the same 10 to 12 percent growth online in 2019, or as much as $764.8 billion.
There are a number of uncertainties at play in the retail industry today that could impede some of this growth, though.
A pending trade war with China has many companies on their toes, not knowing if another wave of tariffs could go into effect later this year on goods like cotton-based apparel. There's fear that the U.S. economy is starting to cool off, which could lead to shoppers pulling back on spending. Tax refunds could also be delayed, which could further hamper some consumers' willingness to go out and spend.
"Most important for the year ahead will be the ongoing strength in the job market, which will support the consumer income and spending that are both key drivers of the economy," the NRF's chief economist, Jack Kleinhenz, said. He also told members of the media he didn't expect another round of tariffs would materialize. "If it does happen, I think it would be a surprise to many," he said.
NRF's 2019 sales forecast also comes on the heels of a handful of retailers, including Macy's, Kohl's and Nordstrom, having already released holiday sales results ahead of their quarterly earnings reports. And many announcements were underwhelming, prompting analysts to temper expectations for the year.
In addition to potential trade and economic issues, retailers are spending heavily on their supply chains, labor and other tech initiatives to compete with the likes of Amazon. So far, many companies have benefited from tail winds like low unemployment and low gas prices. But they could be challenged if these trends reverse.
"We are [still] waiting on data from the shutdown," NRF's Klein said. "I think we will take it one day at a time as the data comes through."
The Commerce Department hasn't yet set a date for the release of December retail sales, which will show just how well the retail industry performed as a whole during the holiday season.