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Economic Forecasts

A Very Good Holiday Season

Kiplinger’s latest forecast on retail sales and consumer spending


GDP Third-quarter growth a solid 3.5%, but slowdown is coming More »
Jobs Unemployment rate will decline further in '19 More »
Interest rates 10-year T-notes at 3.6% by end ’19 More »
Inflation 2.3% in ’19, the same as in ’18 More »
Business spending Up 7% in ’18, boosted by expanded tax breaks More »
Energy Crude trading from $65 to $70 per barrel in March More »
Housing 5.46 million existing-home sales in '18, down 1.5% More »
Retail sales Growing at least 4% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

E-commerce sales were very strong in November, while in-store sales also looked good. Total retail sales excluding autos and gas rose a strong 0.8% in both October and November. We expect total holiday receipts to swell 4.8%, above average for the decade. In-store holiday sales will expand 3.1%. Consumer inflation-adjusted income is still growing at close to 3%, the best in three years.

Restaurant sales are showing signs of fatigue. Restaurant spending peaked in July and has declined 1.6% since. It’s possible that the sudden stop to stock market gains is dinging consumer spending on luxuries a bit, or worker shortages are slowing expansion. Car sales will likely settle back into slow-growth mode.

2018 will go down as a good year for retail. Sales, excluding gasoline and autos, will increase 4.9%, better than 2017’s 4.2% pace, and the best since 2011. Building-materials’ sales are advancing at a more sustainable, 3.7% rate, compared with a hot 8.2% in 2017. Sales of all other goods will swell 4.8% in 2018, a step up from 2017’s 3.9% and the best gain in seven years. E-commerce will have yet another banner year, jumping 15%, while in-store sales should do alright at 3.4%, their best showing since 2014. After several years of heady growth, auto sales appear to be peaking and will end the year up just 2.6%. The boost from replacement of hurricane-damaged cars has likely ended.

Retail sales in 2019 are expected to slow a bit, but still expand at least 4%.

Source: Department of Energy, Price Statistics