Continue to cool down! The US retail market is expected to grow slightly by 4%-6% in 2023!

According to the forecast of the National Retail Federation (NRF), the growth rate of US retail sales this year will be lower than last year. NRF expects US retail sales to grow by 4% to 4% in 2023, with a total of between US$5.13 trillion and US$5.23 trillion (excluding motor vehicles, gasoline and restaurants).

By comparison, retail sales rose 7% last year to $4.9 trillion. However, retail growth in 2023 is higher than pre-pandemic levels, when the average annual U.S. retail sales growth rate was 3.6%.

The NRF also predicts that retail sales growth will slow in the coming months but will remain positive even as sales begin to stabilize from their pandemic-era highs.

NRF Chief Economist Jack Kleinhenz noted that while restrictive monetary policy is purposefully holding back inflation, overall economic activity is holding up well. He acknowledged that recent developments in financial markets and the banking sector, as well as some unresolved public policy issues, complicate the outlook.

"While it is too early to tell the full impact of the banking turmoil, consumer spending looks quite good in the first quarter of 2023," Kleinz said. "While we expect consumers to maintain spending, we expect the pace of consumer spending to be softer and potentially uneven through the rest of the year."

In 2023, non-physical and online sales in the United States are expected to grow by 10% to 12% year-on-year to reach 1.41 trillion to 1.43 trillion. It is observed that physical stores are still the main purchase point for consumers, accounting for about 70% of total retail sales.

NRF expects that the US GDP will grow by about 1% for the full year, which reflects a slowdown in the pace of the economy, as this growth level is half of the 2.1% in 2022. On the other hand, US inflation is cooling, and the inflation rate is expected to remain between 3% and 3.5% for the full year.

While the labor market remains resilient, the NRF expects job growth to decelerate in the coming months amid a slowdown in economic activity and the prospect of restrictive credit conditions. The NRF said the U.S. unemployment rate is likely to exceed 4% before next year.

Editor ✎ Nicole/

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