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October, 201811:58 PM



Tariffs won't dent US Santa spending this year: forecast

Tariffs won't dent US Santa spending this year: forecast

Tariffs won't play the Grinch this Christmas, as US stores should have a solid holiday shopping season amid a strong economy, the National Retail Federation said Thursday.

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04.10.2018 12:12 PM

Tariffs won't play the Grinch this Christmas, as US stores should have a solid holiday shopping season amid a strong economy, the National Retail Federation said Thursday. 

The retailer group highlighted robust US job growth and healthy consumer confidence, as elements that will help drive a 4.3-4.8 percent rise in holiday sales compared with last year, for a total of as much as $721 billion.

The group has repeatedly warned that President Donald Trump's trade wars with China and other nations could result in higher prices for consumers. But there has been little direct pain thus far from conflicts.

NRF officials said they remain optimistic that serious impacts from trade could still be averted. And other industry surveys indicate firms have accelerated their imports to try to get product in ahead of the tariffs.

"We're hopeful with the progress we've seen on trade deals that we'll resolve the issues that exist with our trade partners in China," said NRF chief executive Matthew Shay.

"We have seen sufficient momentum of the economy this year that we're confident we'll get through the third and fourth quarter with continued strong growth," he added in a briefing with analysts.

Trump this week reached agreement with Canada to cement a new North American free trade deal that includes Mexico.

But relations between the US and China remain brittle after several back-and-forth trade tariff announcements. The US also still has plenty of unresolved issues with the European Union.

Labor shortage, rising wages

Trade is not the only growing worry facing retailers, however. Companies also are stretched to find enough seasonal workers in the tightening labor market.

And higher pay to attract workers -- most recently with Amazon's announcement Tuesday that it was lifting US wages to $15 a hour -- will pressure stores to weigh whether to pass on the higher costs to consumers or accept lower profits.

But trade is the biggest wildcard, NRF officials said, although they suggested the holiday shopping season would not be seriously affected. 

"Until we start to see really a manifestation (of trouble) we don't see the spending change right away," said NRF chief economist Jack Kleinhenz.

"Consumer attitudes stay aloft until we start seeing more headlines and the first one would be the impact on employment."

NRF's projections imply slower sales growth this year, after the 5.3 percent gain in the 2017 holiday shopping season compared to the prior year for a total of $687.9 billion. 

But the estimate was consistent with the outlook of IHS Markit earlier this week which forecast growth of 5.0 percent this year.

Sales this year won't benefit from the surge in spending following the calamitous 2017 hurricane season, which led to heavy consumer outlays to replace damaged goods and infrastructure, IHS said.
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