Retail sales are expected to top $5.6 trillion this year, growing 4.4% from 2025, according to the National Retail Federation (NRF). The trade group partnered with Oxford Economics to help with the forecasting model used in this year’s prediction.
The sales projection includes store-based and online purchases in a broad range of retail categories, including discount stores, department stores, grocers and specialty stores, but excludes purchases at automotive dealers, gasoline stations and restaurants.
“Consumer spending was a steady and reliable engine of growth in 2025, even as broader economic conditions fluctuated,” NRF President and CEO Matthew Shay said. “We expect that consumer resilience to continue into 2026, with household spending once again serving as a pillar of economic support.”
The 4.4% growth forecast is the highest prediction since 2022, and the skewed results from 2020 to 2022 relate to the global pandemic. Excluding the 2020 to 2022 record years of growth, the 2026 forecast of 4.4% is higher than the average 3.6% growth recorded between 2013 and 2025.
“Renewed tensions in the Middle East and the ripple effects across global markets are adding more uncertainty to the economic landscape,” said Mark Mathews, NRF chief economist. “While the geopolitical environment and ongoing trade policy challenges warrant close attention, we remain optimistic that the underlying fundamentals of the U.S. economy will support continued stability in the year ahead.”
He said the spending outlook is still split between higher- and lower-income consumers, with higher-income households driving the majority of growth in spending across a range of retail categories. That said, Mathews expects consumer activity to rise in the first half of the year thanks to larger average refunds associated with the Working Families Tax Cut Act.
Other economic wildcards could dampen consumer spending. Inflation is expected to remain elevated through midyear before easing in the third quarter. There are renewed tariff uncertainties, and elevated gasoline prices as a result of the ongoing Middle East conflict.
Mathews said labor market conditions are expected to soften, with muted non‑farm employment growth throughout much of the year. But the unemployment rate is projected to remain below 4.5%, which is low by historical measures.
Consumer sentiment is not expected to improve significantly given the sustained inflation and higher fuel prices. Mathews said sentiment is not always connected to actual spending patterns. Solid underlying fundamentals, particularly income growth, household balance sheets and labor market stability, are expected to support continued consumer activity in 2026, he added.
The trade group’s sales forecast does include the potential impact of tariffs that remain close to the current levels. Significantly higher tariffs or greater trade policy uncertainty could weigh on hiring and hit equity markets, weakening consumer spending, Mathews said.
The forecast is not adjusted for inflation, but goods inflation is expected to stay below the Federal Reserve’s target, according to Mathews. He expects a meaningful portion of sales growth estimates will reflect real gains rather than inflation-driven increases.
NRF released its annual sales forecast in a webinar on Wednesday that also included a leisure travel spending forecast of $800 billion this year and restaurant sales to grow 4.8%, driven by higher-income households among multiple age demographics, led by Millennials (ages 30 to 45).
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