Retail Sales & Consumer Spending Forecast

Economic Forecasts

A Good December, but E-commerce is a Puzzle

Kiplinger’s latest forecast on retail sales and consumer spending.


GDP 2019 growth will be 2.3%; 1.8% in 2020 More »
Jobs Job gains of about 150,000 per month in ’20 More »
Interest rates 10-year T-notes staying around 2% until trade war ends More »
Inflation 2.2% through ’20, from 2.3% at end '19 More »
Business spending Up just 2% in ’19 amid uncertainty of trade war More »
Energy Crude trading from $60 to $65 per barrel in March More »
Housing Total starts up 3.2% in '20 More »
Retail sales Retail and food service sales excluding autos and gas should rise 3.5% in 2020 More »
Trade deficit Widening 6% in ’20 More »

Retail sales excluding gas and motor vehicles surged in December, but that came after three straight monthly declines from September to November. As a result, holiday sales rose only 4.1% this year, short of expectations. But the December turnaround was dramatic for a number of store categories: Clothing, sporting goods and hobby, health and personal care, building materials, and electronics and appliance stores all showed substantial improvement over their performance in November. That bodes well for sales momentum this winter. However, department store sales continued their long decline.

Motor vehicle sales dropped in December, but that followed two strong months. Restaurant sales rose only modestly, but should be buoyed in the coming months as a very strong stock market makes people feel wealthier and thus more likely to spend on non-essentials.

While in-store sales had a good December, e-commerce sales did not, and therein lies the puzzle. Reported e-commerce sales have downshifted since September, with almost no growth at all being recorded after nearly 20% growth through August in 2019. This is hard to make sense of. The Census Bureau data series can be a bit funky sometimes, and it’s possible that it could be revised later. Perhaps a better report for the fourth quarter will be released by the Bureau on February 19.

Good consumer sentiment and a strong stock market (so far) in 2020 should provide support for consumer spending. Look for 2020 retail sales excluding motor vehicles and gasoline to rise 3.5%, a tad slower than last year’s 3.8% rate.

Source: Census Bureau, Retail and Food Service Sales statistics