Retailers fret about tariffs, but expect 3.8-4.2 percent bump in holiday sales

The National Retail Federation (NRF) on Thursday projected a strong holiday sales season, with an expected increase of 3.8 to 4.2 percent over last year.

But the group raised continued concerns about President Trump’s trade war with China, and how it could affect sales around the corner.

{mosads}”It’s certainly well above the unusually low growth we saw last year, around 2 percent,” NRF President and CEO Matthew Shay said on a call with reporters.

Trump delayed a series of planned tariffs to avoid the holiday season, but a tariff increase is scheduled for Oct. 15 and new tariffs are on the books for December as well. Those may not affect the current holiday season, because retailers will stock up on goods ahead of time, but could start to drag on sales next year.

“The uncertainty around those issues has really been in many ways the overarching theme of the economy this year while we continue to see this tremendous growth,” said Shay. “The biggest news in the uncertainty is related to trade issues.”

NRF’s internal surveys show that 80 percent of consumers are concerned about the effect of tariffs on prices, even if they haven’t yet noticed a price increase. Those concerns could start to eat into consumer confidence.

“Consumers are in good financial shape and retailers expect a strong holiday season. However, confidence could be eroded by continued deterioration of these and other variables,” he said.

Still, even as economic growth is projected to fall from 2.9 percent last year to a more sluggish 2.3 percent this year, the holiday sales expectations top the average for the past five years.