Retail sales are forecast by the NRF to rise at a slower pace in 2024

The National Retail Federation forecast on Wednesday that retail sales will increase in 2024 between 2.5% and 3.5% from a year ago to land in a range of $5.23T and $5.28T. The forecast implies a deceleration from the 3.6% annual retail sales growth seen in 2023, but the pace is roughly in line with the 10-year pre-pandemic average annual growth rate.

As usual, non-store and online sales are expected to outpace brick-and-mortar retail sales. The category that includes online sellers such as Amazon (AMZN), Etsy (ETSY), Wayfair (W), and Chewy (CHWY) is forecast to grow between 7% and 9% in 2024 from a year ago to a range of $1.47T to $1.50T.

"The economy is primarily supported by consumers who have shown much greater resilience than expected, and it’s hard to be bearish on the consumer," highlighted NRF Chief Economist Jack Kleinhenz, "The question for 2024 ultimately is, will consumer spending maintain its resilience?"

Looking ahead, NRF expects a tight labor market, with its robust job growth and wage gains fueling consumer spending, will cool in 2024. With the pace of the economy slowing in 2024, NRF expects about 100K fewer jobs on average per month compared with 2023 and the unemployment rate to average around 4% for the full year. On the positive side, consumer balance sheets and debt servicing levels were noted to remain in good condition.

Some of the consumer discretionary stocks that have dramatically outperformed in 2024 include RealReal (REAL) +70%, Maplebear (CART) +61%, CAVA Group (CAVA) +55%, Shake Shack (SHAK) +44%, Deckers Outdoor (DECK) +35%, and Gap (GPS) +25%.

The consumer discretionary stocks with the highest Seeking Alpha Quant scores include Abercrombie & Fitch Co. (ANF), Gap (GPS), Urban Outfitters (URBN), Brinker International (EAT), and Dillard's (DDS).