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Economic Forecasts

A Good Holiday Season In-store and Out

Kiplinger's latest forecast on retail sales and consumer spending

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GDP 2.9% pace in '18, up from 2.2% in '17 More »
Jobs Unemployment rate down to 3.8% by end '18 More »
Interest rates 10-year T-notes at 3.0% by end '18 More »
Inflation 2.5% in '18, up from 2.1% in '17 More »
Business spending Up 4% in '18, spurred by expanded tax breaks More »
Energy Crude trading from $55 to $60 per barrel in April More »
Housing Existing-home sales up 1.0%, new-home sales up 7.5% in '18 More »
Retail sales Growing 4.7% in '18 (excluding gas) More »
Trade deficit Widening 5%-6% in '18 More »

Holiday sales surged 5.9% in 2017, the best season since 2005. Both in-store and out-of-store sales benefited from the consumer spending splurge. E-commerce and catalog sales picked up 13.6%, their best increase since 2014. In-store holiday sales also did well, rising 4.2%, their best upsurge since 2014.

2018 should be a good year for retail. Sales, excluding gasoline, will grow 4.7% — better than 2017’s 4.2% pace. Consumer wealth gains will lead to more home improvement projects and will keep building materials’ sales humming, with 8.9% growth, compared with 8.2% in 2017. Sales of all other goods will advance 4.6% in 2018, also a step-up from 2017’s 3.9% and the best growth in seven years. E-commerce will have yet another banner year, growing 16%, while in-store sales should do all right at 2.4%, their best showing since 2014.

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Auto sales will be nearly flat after years of strong growth. The new tax law makes it easier for businesses to purchase motor vehicles, which will help the industry in a year that will see consumer demand ease.

Restaurant sales should rise 4.6% in 2018, a bit more than 2017’s 3.2%, as flush consumers typically eat out more when times are good. However, the restaurant boom of 2011-16 is likely over. Some chains will find expansion harder because of labor shortages, which will curtail sales increases. Higher minimum wages will boost menu prices.

SEE ALSO: 6 Retailers That Can Stand Up to Amazon

Source: Department of Energy, Price Statistics