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Economic Forecasts

A So-so Holiday Season?

Kiplinger’s latest forecast on retail sales and consumer spending


GDP 2.5% growth in '19, down from 2.9% in '18 More »
Jobs Unemployment rate will decline to 3.4% by end '19 More »
Interest rates 10-year T-notes at 3.0% by end ’19 More »
Inflation 2.2% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $55 to $60 per barrel in June More »
Housing 5.35 million existing-home sales in ’19, down 0.4% More »
Retail sales Growing 4% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Retail sales were reported to have dropped sharply in December. Some pullback was expected because of the 16% stock market drop early in the month, and the government shutdown in the second half. But the shutdown delayed Census Bureau data collection, which may have led some respondents to erroneously include January sales, which are normally low. But if the December data are accurate, that would turn a good holiday sales season into an average one, with growth of only 3.1% for merchandise sales.

Things that don’t make sense about the December numbers: A private collection of retail sales data called the Redbook showed sales growing strongly each week of December, falling only during the polar vortex of January. The Census Bureau also reported a fall in e-commerce receipts, despite record sales reported by Amazon.

Sales should start picking up in February and beyond. January sales were likely depressed by the near-record low temperatures recorded across much of the middle of the country. Now temperatures are closer to normal or even above average. Also, the stock market has regained nearly all of its December drop.

Sales in 2019 should still show good growth of 4%, excluding gasoline and autos. E-commerce sales will continue rising aggressively, probably 15%, for the 10th straight year. In-store sales will increase, though only at about a 2% to 3% rate.


The long-expected slowing of restaurant sales appears to be here. Restaurant spending peaked in July and has declined 2.9% since. It’s possible that the sudden stop to stock market gains dinged consumer spending on extras a bit, or worker shortages are slowing expansion. Car sales will likely settle back into slow-growth mode, although these have proved to be more durable than expected.

Source: Department of Energy, Price Statistics