"Given the strong performance of recent economic data and the appearance of a healthier consumer and business outlook, 2014 could finally be the year that the recovery gets traction," said Jack Kleinhenz, Cleveland-based chief economist for the National Retail Federation.
View full sizeChocolate truffles inside a solid-chocolate heart at Fantasy Candies Chocolate Factory in Lyndhurst. The National Retail Federation says 49 percent of consumers will buy candy this Valentine's Day, the beginning of a brighter 2014 retail year.CLEVELAND, Ohio - Barely a week into the new retail year, the National Retail Federation already is forecasting a retail industry sales increase of 4.1 percent for 2014, up from last year's 3.7 percent growth.
That includes expectations that consumers will collectively spend $17.3 billion on Valentine's Day, an average of $133.91 on candy, flowers, jewelry, greeting cards, gifts, dinner and other purchases, up from last year's average of $130.97.
As with the 2013 holiday season that ended Jan. 31, "retailers recognize that their customers are still looking for the biggest bang for their buck," with would-be Cupids shopping for gifts within their budgets, NRF President and Chief Executive Matthew Shay said in a statement. More than half of consumers will buy greeting cards, 49 percent will buy candy, and 37 percent will buy flowers.
But the outlook for 2014 as a whole remains strong for retail industry sales, which exclude automobiles, gas stations and restaurants. That 4.1 percent growth includes an estimated increase of 9-12 percent for online sales, about the same as the 10.3 percent increase in 2013.
"Measured improvements in economic growth combined with positive expectations for continued consumer spending will put the retail industry in a relatively good place in 2014," Shay said. "Though headwinds in the form of looming debt ceiling debates, increased health care costs, and regulatory concerns still pose risks for both consumers and retailers, we are cautiously optimistic and hopeful that the economic tides will change in 2014."
View full sizeCleveland economist Jack KleinhenzJack Kleinhenz, the Cleveland-based chief economist for the retail federation, wrote in his blog that "Given the strong performance of recent economic data and the appearance of a healthier consumer and business outlook, 2014 could finally be the year that the recovery gets traction."
He pointed out that although consumers started 2013 "faced with higher taxes, surging gasoline prices and federal budget cuts ... consumer spending remained resilient and continues to contribute greatly to the current momentum."
The challenge this year is that while the economy looks better for retailers, the extra-promotional Christmas shopping season may have conditioned consumers to "expect a continuation of holiday promotions and discounts, putting pressure on many retailers' bottom lines once again," Kleinhenz said.
Among the arrows pointing up for 2014:
Economic growth is expected to be higher than its long-term historical average. "My baseline estimate for growth in the economy as measured by real GDP is between 2.6 and 3 percent, a noticeable improvement from the estimated 1.9 percent rate for 2013, and the fastest pace in the past three years," he said.
Kleinhenz expects the labor market to continue its modest recovery, adding an average of about 185,000 jobs per month, which would help lower the unemployment rate to "near 6.5 percent or lower by the end of 2014."
"Inflation as measured by the Consumer Price Index is predicted to inch higher to as much as 1.78 percent in 2014," he said.
The housing sector also is expected to continue recovering, "and stronger household and business confidence should spur more consumers spending overall," Kleinhenz said.
"The economy remains susceptible to buffets as we are already witnessing in the New Year, thanks to harsh winter weather, domestic and global financial issues," he said. "While we are careful not to ignore the challenges, we are optimistic and hopeful that future disruptions will be limited, allowing unemployment and business investment to grow all the while giving retailers and their customers the confidence in the economy they need."