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The Green Sheet Online Edition

March 14, 2016 • Issue 16:03:01

Retail outlook steady amid economic, political uncertainties

Declining stock market prices and widespread economic uncertainties are having little impact on consumer spending, according to new reports from Kiplinger and the National Retail Federation. The organizations, respectively, view the retail sector outlook for 2016 as somewhat below or on par with 2015 results. And the National Small Business Association reported increased confidence in the future among its members despite indications that economic insecurity is a top concern.

The NRF's 2016 economic forecast predicts 3.1 percent growth in the coming year in traditional retail, including the automotive aftermarket and department, grocery and specialty store sectors. The NRF's preliminary analysis of 2015 data indicates a 3.1 percent increase in 2015, as well.

NRF President and Chief Executive Officer Matthew Shay believes improved wages, employment and consumer confidence will continue to drive economic recovery. "All of the experts agree that the consumer is in the driver's seat and steering our economic recovery," Shay stated. "The best thing the government can do is stay out of the way, stop proposing rules and regulations that create hurdles toward greater capital investment and focus on policies that help retailers provide increased income and job stability for their employees."

NRF Chief Economist Jack Kleinhenz added, "Lower gas prices are creating more discretionary income to save, pay down debt and spend on travel, eating out and personal services. Retailers have benefited as well, and continue to find ways to compete and succeed in a very cost-conscious environment."

Forecasts indicate modest growth

Kiplinger predicts a 3.9 percent uplift in retail sales in 2016, down from 4.6 percent the previous year. Overall consumer spending is expected to rise to 3.5 percent in 2016, following 3.2 percent growth in 2015, the company stated, noting a healthy increase in e-commerce transactions in January 2016, which may have been helped by inclement weather across many U.S. regions.

Kiplinger researchers additionally anticipate a 2.3 percent increase in overall inflation, reflecting steady economic growth and modest gains in gas prices. This moderate increase, based on rising prices of goods and services, will further stabilize the economy and support long-term sustainable growth, according to the report.

In its fourth quarter advance gross domestic product estimate released in January 2016, The U.S. Bureau of Economic Analysis noted positive contributions from personal consumption expenditures, residential fixed investment and federal government spending.

Small business owners feel misunderstood

The NSBA's 2015 Year-End Economic Report, published Feb. 10, 2016, found a tone of cautious optimism among small to midsize retailers. The NSBA stated in the report that "75 percent of small-business owners expressed confidence in the future of their own businesses – up from 71 percent six months ago, and the highest this indicator has been in four years. Business growth appeared to stay on track over the last six months with no change in the number of small firms that cited increases in revenues."

In addition, NSBA President and CEO Todd McCracken observed that small business owners remain concerned about the economy, despite modest improvements in hiring, wages and access to financing. "This dichotomy is not surprising, [given] the recent stock market volatility and rhetoric surrounding the 2016 election."

NSBA Chair Cookie Driscoll added, "Economic insecurity is the biggest challenge facing small firms today. Policymakers play a very real role in these trends and, unfortunately our survey found that just five percent of small business owners believe that the various presidential candidates understand small business very well." The Green Sheet, Inc.

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