NRF: Tariffs to Have Little Impact on Prices and Growth
The National Retail Federation (NRF) delivered a reassuring message to retailers after President Trump’s reciprocal tariff announcement on April 2. Despite the implementation of tariffs, the NRF expects the inflation rate to remain at current levels of 2.5 percent as measured by the personal consumption expenditure index. In addition, the retail industry is forecast to grow between 2.7 percent and 3.7 percent this year, above the 2.5 percent to 3.5 percent growth predicted last year. Ultimately, the retail market did better than that, pulling out a 3.6 percent increase. The NRF is projecting 2025 to end between $5.42 trillion and $5.48 trillion, excluding auto, gasoline and food service retailers.
Total Retail's Take: The optimistic forecast from the NRF may momentarily allay the concerns of retailers, however, there's plenty of economic uncertainty that figures to impact their businesses in way or another in 2025. Of course there are the tariffs, requiring retailers to decide whether to pass those extra costs along to the consumer (and potentially negatively impact top-line sales) or absorb them as a business (and negatively impact bottom-line profits). Then there's the fact that consumer confidence in the U.S. has recently plummeted, as concerns about a potential recession and inflation rise, leading to a decline in discretionary spending. Against this economic backdrop, retailers will have to identify ways to limit costs across their organizations (supply chain, marketing, store operations, etc.) while optimizing the customer experience to drive increased sales and customer loyalty.
“Any way you look at it, a lot is riding on the consumer,” NRF Chief Economist Jack Kleinhenz said in the company press release. “While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances. Consumer spending is not unraveling.”
