If the National Retail Federation (NRF) is correct, retail industry sales will be okay in 2015, just not as okay as the group originally thought when it issued its first forecast for the year.
Today, NRF issued an announcement that it is lowering its forecast for the year to 3.5 percent growth. The trade association previously said it expected sales to improve by 4.1 percent.
According to NRF, a slower than expected first half of the year is largely responsible for its revised projection. Sales during the first six months of the year grew at a 2.9 percent clip as a number of factors, some beyond the control of retailers, helped tamp down consumer purchases.
"A confluence of events, including treacherous weather throughout the United States through most of the winter, issues at the West Coast ports, a stronger U.S. dollar, weak foreign growth and declines in energy sector investments all significantly and negatively impacted retail sales so far this year, and thus have changed how future sales will shape up for the rest of 2015," said Jack Kleinhenz, NRF's chief economist, in a statement. "Additionally, household spending patterns appear to have shifted purchases toward services and away from goods, though this may be transitory. Additionally, a deflationary retail environment has been especially challenging for retailers' bottom lines."
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NRF's revised guidance comes at a time when unemployment continues to fall in much of the U.S. while wages continue to remain under pressure despite announcements by a number of large retailers and restaurant chains that they are raising the basement on entry-level pay for hourly workers.
According to Labor Department figures, 223,000 jobs were added in June helping to lower the national unemployment rate to 5.3 percent. All parts of the country, excluding the West, saw unemployment rates fall. The Federal Reserve, according to The Associated Press, considers unemployment rates of 5.5 percent or less as being in "full health."
Matt Shay, president and CEO of NRF, said, "We are optimistic that consumer spending during the second half of the year will benefit from recent improvements in the housing and labor markets along with lower energy costs, and believe consumer confidence will grow enough to bolster retail purchases for the year."