The National Retail Federation (NRF) just upgraded its retail sales forecast for 2018, expecting sales to grow at a minimum of 4.5 percent over 2017 rather than the 3.8 to 4.4 percent range forecasted earlier this year (excluding auto sales, gas stations and restaurants), signaling momentum going into the important holiday season and fourth quarter.
“Higher wages, gains in disposable income, a strong job market and record-high household net worth set the stage for robust growth in the nation’s consumer-driven economy,” said Matthew Shay, NRF president and CEO in a statement. “Tax reform and economic stimulus have created jobs and put more money in consumers’ pockets, and retailers are seeing it in their bottom line. We knew this would be a good year, as the first half turned out even better than expected.”
Retail sales in the first half of 2018 grew 4.8 percent year-over-year and have been up 4.4 percent year-over-year in the most recent three-month moving average. The NRF now expects gross domestic product for the year to grow at the higher end of the 2.5 to 3 percent range it forecasted earlier this year.
It could be a banner year, said Shay, but he acknowledged that tremendous uncertainty remains as to what extent the current trade tariffs will impact consumer spending. “Just the mere talk of tariffs negatively impacts consumer and business confidence,” he said, “leading to a decline in spending. It’s time to replace tariffs and talk of trade wars with diplomacy and policies that strengthen recent gains, not kill them.”
Tariffs of 25 percent on $34 billion worth of Chinese goods took effect in July, reported the NRF, and are scheduled to take effect this month on another $16 billion. But both lists include a relatively low number of consumer products. Another round of tariffs on $200 billion in goods from China, which would include a broader array of consumer items, will likely be finalized in September.
About two dozen Chinese jewelry items and jewelry-related materials may see a 10 percent tariff, including glass beads and stones, and platinum, gold and silversmith wares. Spared for now, appear to be Chinese pearls, gemstones and finished diamonds, and finished jewelry. According to the Census Bureau, in 2017 China exported $2.1 billion in jewelry to the United States, as well as $147 million in gem diamonds and $1 billion in gemstones.
“Although we are cognizant of the various proposed tariffs, we are still investigating their potential impact on the industry and our company,” said Mark Hanna, Chief Marketing Officer of the NYC-based Richline Group. He said there’s uncertainty for some materials, including miners’ diamonds, un-worked or simply sawn or cleaved; precious metal articles, other than silver, whether or not plated with other precious metal; and sterling silver table and house wares. He said a few line items seem to specifically exclude finished jewelry related to precious metals like gold and silver.
For the rest of the year, the outlook for retail sales remains optimistic. NRF Chief Economist Jack Kleinhenz said spending has grown rapidly since the first quarter. “We anticipate strong sales during the second half of 2018.”
The upgraded forecast considers government revisions to retail sales, personal income and consumption numbers from 2016 and 2017 that affect year-to-year comparisons. Total retail sales have grown year-over-year every month since November 2009, Kleinhenz said, and retail sales have increased year-over-year in all but three months since 2010.
Looking forward to a robust holiday season, fourth quarter and year overall, Theresa Namie, merchandise manager for Ostbye in Minneapolis, Minnesota expects a good fourth quarter industry wide as momentum remains steady this year. “Our independent jewelers have planned and adjusted over the last few years on how to sell to the next generation, including social media, online sales and the variety of styles the consumers are asking for.”
Ostbye is promoting products like 10K gold fashion with beaded detail; silver set with emerald, ruby and sapphire; and birthstone stackable rings among its expected 4Q winners.