NRF upgrades its economic forecast

With increases in consumer spending expected to remain solid during the remainder of the year, the National Retail Federation said retail sales for 2016 are now expected to grow 3.4% over last year rather than the 3.1% forecast earlier.

Online and other non-store sales, which are included in the overall figure, are expected to increase 7% to 10% year-over-year, rather than the previously forecast 6% yo 9%..

“Economic indicators are showing positive trends for retail,” said NRF President and CEO Matthew Shay, citing the improved housing market, job growth, higher wages and other factors that have boosted consumer spending. “Challenges remain, with some greater than others depending on the retail category, but consumer confidence remains high and we believe that retail customers will continue the positive trends we have seen in the first two quarters of the year.”

Retail sales in the first half of 2016 performed at a solid pace, growing close to 4% on a year-over-year basis, according to NRF calculations, which exclude automobiles, gasoline stations and restaurants. NRF expects gross domestic product to grow between 1.9%  and 2.4%.

“There are many factors that could prove to be hurdles but our overall outlook is optimistic,” NRF Chief Economist Jack Kleinhenz said. “Uncertainty surrounding the presidential election could make consumers more cautious, and the combination of a rising dollar and global slowdown have impacted exports, but other factors like favorable weather patterns that will help move winter merchandise support our outlook.”

The NRF's next update to its forecast will come as part of its annual holiday forecast in October.