Economic challenges have shifted from COVID-19 to inflation and the war in Ukraine. As a result, the U.S. economy will continue to face uncertainties in the year ahead.

“While the public health situation has greatly improved, the impact of the pandemic continues to spread,” National Retail Federation (NRF) Chief Economist Jack Kleinhenz said. “That ripple has extended into 2022 and includes a disproportionate impact from inflation reaching a 40-year high brought about by strong consumer demand interacting with restricted supply.”

“Complicating the picture is the very high uncertainty associated with the war in Ukraine and its effect on the world economy,” Kleinhenz said.

The latest data shows that the U.S. economy’s outlook has strong momentum and consumers remain in the driver’s seat. After capping off 2021 with 5.7 percent growth in gross domestic product — the most robust rate since 1984 — the economy is set to grow at a still-healthy 3.5 percent pace in 2022, adjusted for inflation.

The NRF is forecasting that retail sales for 2022 will increase between 6 percent and 8 percent to between $4.86 trillion and $4.95 trillion. The NRF released the forecast during its annual State of Retail and the Consumer virtual event, where retail industry leaders discussed the strength of the consumer economy and the future of retail.