Despite initial reports to the contrary, the National Retail Federation said economic uncertainty resulted in lower-than-expected retail sales over the 2018 holiday season.
According to the group, sales increased 2.9 percent over 2017 to total $707.5 billion, falling short of its original expectations of a 4.3 to 4.8 percent increase, or $717.5 to $720.9 billion.
“Today’s numbers are truly a surprise and in contradiction to the consumer spending trends, we were seeing, especially after such strong October and November spending,” NRF Chief Economist Jack Kleinhenz said.
“The combination of financial market volatility, the government shutdown and trade tensions created a trifecta of anxiety and uncertainty impacting spending and might also have misaligned the seasonal adjustment factors used in reporting data. This is an incomplete story, and we will be in a better position to judge the reliability of the results when the government revises its 2018 data in the coming months.”
The NRF bases its predictions on data from the U.S. Census Bureau.
Earlier this month, the NRF predicted retail sales will increase 4 percent in 2019, citing the bureau’s reports through November 2018, plus its own predictions for the month of December, as the bureau’s figures for the month were delayed due to the government shutdown.
At the time, the NRF said that threats of a trade war, a volatile stock market and the shutdown hadn’t had too much of an effect on spending, though these revised holiday figures point to the contrary.
“All signs during the holidays seemed to show that consumers remained confident about the economy,” NRF President and CEO Matthew Shay said.
“However, it appears that worries over the trade war and turmoil in the stock markets impacted consumer behaviour more than we expected. There’s also a question of whether the government shutdown and resulting delay in collecting data might have made the results less reliable. It’s very disappointing that clearly avoidable actions by the government influenced consumer confidence and unnecessarily depressed December retail sales.”
Total online and other non-store sales for the holidays were $146.8 billion, up 11.5 percent over 2017. NRF had originally predicted an 11 to 15 percent increase, totalling between $151.6 and $157 billion.
While November 2018 sales were up 5.1 percent year-over-year, December 2018 sales only increased 0.9 percent and were down 1.5 percent when seasonally adjusted from November.
These figures exclude auto dealers, gas stations and restaurants.