NRF forecasts retail growth to slow in 2006

The National Retail Federation (NRF), citing tough comparisons, high energy costs and a slowing housing market, is forecasting retail spending to grow 4.7% in 2006, compared to 6.1% in 2005.

Facing new economic challenges in 2006, consumers may be forced to find new sources for spending power. The National Retail Federation (NRF) released its 2006 forecast today, predicting that retail industry sales (which exclude automobiles, gas stations, and restaurants) will increase 4.7 percent from last year. In its quarterly Retail Sales Outlook Report, released this morning at NRF’s 95th Annual Convention & EXPO, NRF expects a slowdown in the economy and consumer spending to restrain industry sales gains.

“With the housing market beginning to slow, consumers will be challenged to find new sources of spending power.” said NRF Chief Economist Rosalind Wells. “The strong retail sales we saw in the second half of 2005 will be replaced by more conservative spending in the New Year.”

Meanwhile, MarketWatch is reporting that the U.S. economy slowed in the fourth quarter:

The U.S. economy grew at the slowest pace in nearly three years in the just-concluded fourth quarter, economists now estimate.

Led by what could be the weakest consumer spending since 1991, the economy likely grew at about a 2.7% annual pace in the quarter after 11 straight quarters of growth above 3%, economists say.

Interestingly housing apparently remained strong in Q4:

Housing was one of the few bright spots in the fourth quarter’s growth mix, along with inventory rebuilding. The weak sectors were consumer spending, business investment, exports and government spending.

There is some evidence that the housing market is finally slowing (more to come on housing in future posts). Is the long anticipated consumer slowdown finally here?

Best to all, CR Calculated Risk