The strong economic momentum of 2024 is expected to carry into 2025, but public policy decisions could create uncertainty for retailers, according to National Retail Federation (NRF) Chief Economist Jack Kleinhenz. In NRF’s latest Monthly Economic Review, Kleinhenz highlighted key economic trends, including steady consumer spending and job growth, but warned that ongoing debates on tariffs, immigration, deregulation, and taxes could impact business confidence.
Retail sales, excluding auto dealers, gas stations, and restaurants, rose 3.6% year over year in 2024, supported by job and wage growth. However, inflation remains a concern, with the Consumer Price Index rising 3% in January and producer prices up 3.5%. Consumer sentiment also dropped in February, reflecting inflation fears and policy uncertainty.
While Kleinhenz sees economic fundamentals as strong, he cautioned that unclear government policies could slow investment and hiring decisions. With inflation on the rise, the Federal Reserve is unlikely to cut interest rates soon, further adding to economic unpredictability.
Retailers should stay informed as these policy decisions unfold, as they will play a significant role in shaping the economic landscape in 2025.
