Consumer spending is soaring — so much so that a major trade group revised its annual forecast upwards.
Thanks to the tax cuts, a tight jobs market and higher incomes, consumers are spending their hard-earned cash more freely, according to the National Retail Federation, which said on Monday that retail sales rose 4.8 percent for the first six months of the year from the year earlier.
“The second quarter was a very strong,” said NRF Chief Economist Jack Kleinhenz. “The strong job market has been a critical variable and take-home pay is larger because of the tax cuts.”
Consumer spending alone grew at a 4 percent annualized growth rate during the second quarter, Kleinhenz said, “and we haven’t seen that since the fourth quarter of 2017, which was the strongest since 2014.”
Retail sales for the second half of 2018 are expected to grow 4.5 percent, the NRF predicted Monday.
But all of these gains could be derailed by the new tariffs, the trade group cautioned.
“Just the mere talk of tariffs negatively impacts consumer and business confidence, leading to a decline in spending,” said NRF Chief Executive Matthew Shay.