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Takeaways
- The National Retail Federation predicted on Wednesday that the growth of retail spending may slow down in 2025.
- The trade group predicts "core" retail spending will increase 2.7% to 3.7% year-over-year in 2025, compared to a 3.6% increase in 2024.
- Excluding spending on cars, gas and restaurants, Americans' retail spending will hit $5.42 trillion to $5.48 trillion in 2025, NRF estimated.
New data shows that the growth in retail spending will slow in 2025. Inflation and tariff anxiety are expected to continue to weigh on consumer confidence.
According to a report released by the National Retail Federation on Wednesday, Americans will spend between 2.7% and 3.7% more at retailers in 2025. This will generate sales of $5.42 trillion and $5.48 trillion. That compares to a 3.6% year-over-year growth in 2024, when consumers spent $5.29 trillion on "core" retail, which excludes restaurant, car and gas purchases, NRF said.
Jack Kleinhenz, Chief economist at NRF, said: “A lot depends on the consumer.” “While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances."
Kleinhenz said that consumer spending has not “unraveled”, but it is sluggish. This could lead to bigger problems, as consumer spending accounts about 70% of the US gross domestic product (a measure of economic development).
Some companies are preparing for a slowdown. Williams-Sonoma said last month that it could see a decline in sales for the year to come. American Eagle Outfitters’ (AEO) CEO Jay Schottenstein predicted last month that revenues in the next year would decline.
Retailers say that low-income customers are in pain. Dollar Tree (DLTR), CEO Michael Creedon, described the pressure as widespread. He recently said: “Everyone is hurting right this moment.” He said that Dollar Tree (DLTR) has gained traction among higher-income families looking to save money, a trend Walmart(WMT) also observed.
According to the Census Bureau’s estimates, overall spending increased by 0.2%. According to estimates by NRF, core retail sales fell for the second consecutive month, falling 0.2% between January and February. This excludes spending on cars, gasoline, and food service venues.
Later today, the White House will announce new tariffs. The NRF said that import taxes have made consumers fear a spike in inflation. According to the Consumer Sentiment Index of the University of Michigan, consumer sentiment fell for the third consecutive month in March. The index found that Americans were uneasy about trade policies, the labor markets, business conditions, and personal finances.
