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RAPAPORT... The National Retail Federation (NRF) lowered its retail sales growth forecast slightly for 2014 to 3.6 percent from a previous prediction of 4.1 percent in large part due to a weak first half. The organization anticipates a faster pace of growth for the second half, which includes the all important Christmas season.
The NRF calculated that retail sales grew 2.9 percent during the first half of the year and they expected a growth rate of 3.9 percent in the second half. “No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year’s growth trajectory was impacted,” said NRF's president and CEO, Matthew Shay. “That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions. And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist.”
During a conference call with analysts, the NRF observed that poor weather conditions in many high-population centers during the first quarter created a much more difficult economy than anticipated. In addition, other challenges remain due to an extremely slow recovery following the great recession, which continues to weigh on the job market and business spending. Consumers remain modest in their purchases and are extremely price sensitive. Furthermore, the housing market continues to give off mixed signals; however, NRF's chief economist, Jack Kleinhenz, noted that roughly one third of home purchases are cash transactions, reflecting how consumers have shifted away from using credit in the post-recession economy.
Kleinhenz said, “A second look at our forecast shifted our expectations slightly, but it’s important to note that the outlook is positive. Sales are growing and we expect them to continue at a moderate pace.”
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