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Economic Forecasts

Spring Turnaround for Sales

Kiplinger's latest forecast on retail sales and consumer spending

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GDP 2.9% pace in '18, up from 2.3% in '17 More »
Jobs Slower job gains likely this year as labor market tightens More »
Interest rates 10-year T-notes at 3.3% by end '18 More »
Inflation 2.6% in '18, up from 2.1% in '17 More »
Business spending Up 7% in '18, boosted by expanded tax breaks More »
Energy Crude trading from $65 to $70 per barrel in July More »
Housing Price growth: 5.0% by end of '18 More »
Retail sales Growing 4.4% in '18 (excluding gas and autos) More »
Trade deficit Widening 5%-6% in '18 More »

April followed March as a good month for retail. After a winter respite, monthly sales picked up to where they left off after last year’s strong growth. Sales of clothing and home furnishings surged in April. Monthly in-store sales in general are climbing higher than last year. But department stores have not benefited and will likely miss this year’s boom.

2018 as a whole should be a good year for retail. Sales, excluding gasoline and autos, will grow 4.4%, a bit better than 2017’s 4.1% pace. Higher home prices and fatter consumer bank accounts will lead to more home improvement projects and will keep sales of building materials humming, with 5.6% growth, compared with 8.3% in 2017. Sales of all other goods will advance 4.3% in 2018, a step up from 2017’s 3.7% and the best gain in seven years. E-commerce will have yet another banner year, growing 15%, while in-store sales should do all right at 2.8%, their best showing since 2014.

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Auto sales will rise only 2.2% after several heady years. The tax changes make it easier for businesses to purchase motor vehicles, which will help the industry in a year of lessening consumer demand.

Restaurant sales should increase 4.0% in 2018, a bit more than 2017’s 3.2%, as flush consumers eat out more than cash-strapped ones. However, the restaurant boom of 2011-16 is likely over. Some chains will find expansion harder because of labor shortages, which will also curtail sales increases. And higher minimum wages will boost menu prices.

SEE ALSO: 6 Retailers That Can Stand Up to Amazon

Source: Department of Energy, Price Statistics