In its April Monthly Economic Review, the National Retail Federation (NRF) forecasted that retail sales would grow between 2.5% and 3.5% in 2024, indicating a gradual slowdown compared to the rapid growth seen during the pandemic. The NRF Chief Economist Jack Kleinhenz emphasized that despite expectations for slower growth in both gross domestic product (GDP) and retail sales, the economy is expected to continue performing well for the remainder of the year.
The foundation of the economy is solid and on a sustainable path, with consumer spending being a key driver of the ongoing recovery. While GDP is projected to grow by about 2.3% year-over-year when adjusted for inflation, a slower rate than last year’s 2.5%, it is still sufficient to support job growth and consumer spending. Consumer spending is expected to increase by around 2%, down slightly from last year’s 2.3%.
Kleinhenz highlighted the connection between consumers’ financial health and spending power, noting that the consumer sector currently looks promising as the economy experiences a resilient expansion heading toward its fifth year. The NRF noted a meaningful decrease in inflation, attributed to factors such as moderated wage growth, a more stable supply chain, lower consumer demand, and increased interest rates. While inflation slightly increased at the beginning of 2024, Kleinhenz anticipates a steady decline, with inflation reaching 2.2% year-over-year by year-end. This decrease in inflation could prompt a reduction in interest rates, with Kleinhenz predicting the Federal Reserve to hold rates steady until June, followed by quarter-point rate cuts in September and December.
