NRF expects 2025 retail sales growth between 2.7% and 3.7%

The National Retail Federation reported Wednesday (April 2) it expects 2025 retail sales to top $5.42 trillion, growing between 2.7% and 3.7% above the $5.29 trillion in 2024. Online sales could rise as much as 9%.

CEO Matthew Shay said the 2025 annual forecast aligns with the 10-year average annual sales growth of 3.6% before the pandemic.

E-commerce sales are forecast to grow between 7% and 9% in 2025 to total more than $1.5 trillion. Online sales in 2024 were up 8.1% in 2024. E-commerce sales accounted for 16.1% of total retail sales in 2024, according to the U.S. Department of Commerce.

There are signs of slowing with the all-important consumer spending among some income cohorts, according to Kelly Pedersen, global retail leader at PwC —PricewaterhouseCoopers.

“Consumers are nervous,” Pedersen said during the NRF State of Consumer webinar held Wednesday. “We are closely watching the lower income demographic who has already been hit hard from years of inflation and they can not absorb any more.”

Kathleen Cullen, NRF vice president of consumer insights, said consumers have largely spent savings reserves accumulated during the pandemic, and while their wages have been good, there is no extra cushion to support more spending.

“Consumers are feeling squeezed,” she said.

NRF Chief Economist Jack Kleinhenz said the trade group remains optimistic for retail sales growth above the nation’s GDP growth of an expected 2% this year. He said household wealth growth is also slowing among all income groups, with higher income households facing losses in the financial markets. He said real estate price appreciation and wage growth has slowed.

Kleinhenz does see some upside potential, noting there continues to be a disconnect between weaker consumer sentiment and actual spending. He said consumers may be more choosy about their purchases, but they are still shopping despite sustained inflation.

“Any way you look at it, a lot is riding on the consumer,” Kleinhenz said. “While we do expect slower growth, consumer fundamentals remain intact, supported by low unemployment, slower but steady income growth, and solid household finances. Consumer spending is not unraveling.”

With the implementation of tariffs, NRF expects inflation during 2025 to remain at the current level of about 2.5%. Overall, household balance sheets appear to be in good shape, with delinquencies on auto loans and credit card payments have risen but remain in line with the pre-pandemic trend, the NRF noted. The consumer credit picture should remain healthy as long as the labor market remains solid, Kleinhenz added.

Sarah Wolfe, an economist with Morgan Stanley, said there are some cracks in the foundation of household financials and many consumers are already making trade-offs. Tariffs, immigration and deregulation are each wildcards in the overall economy for the balance of this year.

“I see the first-quarter economic softening in part as a result of pretty strong holiday spending in the previous quarter. We know consumers used credit more in 2024, and they are paying that back in the first part of 2025. I don’t see interest rates going lower this year and some lower-income households will continue to feel like they are in a recession,” Wolfe said.

She expects banks and other industries will be helped by deregulation should it continue to unfold this year and notes some financial institutions are already easing lending standards in the past couple of months.