What: NRF forecasts 2.7-3.7% retail sales growth for 2025 amid consumer confidence challenges and digital commerce expansion.

Why it is important: This projection demonstrates the retail industry's resilience in maintaining growth despite significant headwinds from tariffs and inflation.

The National Retail Federation projects retail sales growth of 2.7-3.7% for 2025, with total sales expected to reach between USD 5.42 trillion and USD 5.48 trillion. Digital commerce continues to show strong momentum, with non-store and online sales forecast to grow between 7% and 9% year-over-year, potentially reaching USD 1.6 trillion. While the economy demonstrates continued momentum, bolstered by low unemployment and real wage gains, significant policy uncertainty is weighing on consumer and business confidence. NRF's chief economist Jack Kleinhenz notes that while consumer confidence is declining due to lingering inflation and tariff anxiety, actual spending patterns remain relatively stable. The forecast, which excludes automobile dealers, gasoline stations, and restaurants, reflects the complex balance between economic fundamentals and growing consumer concerns about the impact of trade policies.

IADS Notes: The NRF's 2025 forecast reflects broader market dynamics affecting retail performance. March 2025 data shows consumer confidence at a three-year low, with inflation expectations reaching 6.0% and the Consumer Confidence Index recording its largest drop since August 2021. This anxiety is well-founded, as March 2025 analysis projects annual household cost increases of USD 1,200 due to tariffs, with 62% of consumers expressing concern about rising retail prices. Despite these challenges, recent performance data from January 2025 demonstrates retail resilience, with holiday season global sales reaching USD 1.2 trillion and online sales growing 8.7% to USD 241.4 billion, suggesting that while consumers remain cautious, spending continues through strategic channel shifts, particularly toward mobile commerce which now accounts for 54.5% of transactions.

NRF predicts retail sales will grow at a slower pace in 2025