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Economic Forecasts

Retail Sales Solid, Despite March Snow

Kiplinger's latest forecast on retail sales and consumer spending

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Inflation 2.5% in '17, up from 2.1% in '16 More »
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Retail sales Growing 4.1% in '17 (excluding gas) More »
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Retail sales, excluding gasoline, are expected to rise by 4.1% this year, better than the 3.8% growth rate in 2016. A pickup in merchandise sales will more than balance out an expected slowing in the growth of motor vehicle sales and restaurant meals.

A March blizzard in the Northeast corridor likely affected March auto, restaurant and building materials sales. Excluding all these and gasoline sales, March “core” retail sales jumped 0.5%, a healthy gain. Core sales are likely to rise 4.1% this year, which would be their best showing since 2014.

Electronics buying surged in March, and specialty retail stores continued their strong performance. E-commerce sales were steady, rising at an annual rate greater than 10% for the third straight year.

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Department stores held their own in March, but the recent string of closure announcements for general merchandise stores makes it likely that the long downward slide in their market share will continue.

Food service sales are expected to slow a little this year as a moderate increase in gasoline prices leaves a little less money in drivers’ pockets for impulse buys at convenience stores.

Higher gasoline prices will make it appear that total sales are surging at a 5% rate this year. But this will be deceptive, because while gas prices are likely to rise, the volume of gas sold will stay fairly flat.

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Source: Department of Energy, Price Statistics