NRF is forecasting U.S. retail sales to grow 4.4% in 2026
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It is still early to assess the potential that a long, drawn-out conflict in the Middle East might create for the retail economy. We have not factored this scenario into our forecast, but will be keeping a close eye on events and will issue a reforecast if circumstances dictate.
Retailer bottom line: Despite geopolitical complications and economic turbulence, the consumer is expected to continue to drive the economy forward in 2026, resulting in above-average retail sales for the year.
In 2026, NRF expects retail sales to grow by 4.4% over 2025. Over the last 10 years, excluding the pandemic period, retail sales growth averaged 3.6% per year, so 4.4% growth for 2026 represents a stronger than normal year. NRF uses its own definition of core retail sales, which excludes auto dealers, gas stations and restaurants.
What’s guiding our forecast?
The U.S. economy was a bit up and down in 2025. The one bright spot was the consumer, whose continued spending was a key economic driver in 2025. We expect this strength to continue in 2026, with consumer spending once again providing key support for the economy.
While we continue to expect consumer strength at the macro level, we also anticipate that this will not be uniform across all income groups. As was the case in 2025, the consumer is likely to remain bifurcated, with higher-income households accounting for more of the growth than lower- and middle-income households.
In the first half of 2026, we expect some stimulus to spending driven by larger refunds from tax cuts in the Working Families Tax Cut Act. Although we expect inflation to remain elevated in the first half of the year, inflation should tail off by the third quarter, providing a bit of relief to consumers in the latter part of the year.
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Does the forecast account for inflation?
It is worth mentioning that our forecast is presented in nominal terms. That means we do not deflate our growth rate by the rate of inflation. And while we do expect inflation to remain above the Fed’s target for the year, we also expect goods inflation will remain in a lower band, meaning that a significant proportion of NRF’s forecasted growth will be real growth and not just an inflation-induced rise in spending.
How is the labor market doing?
We continue to expect a weaker labor market with non-farm employment remaining muted for much of the year. Despite this, we do not anticipate a significant impact on the unemployment rate, which should remain below 4.5%. The disconnect between GDP and the labor market should remain pronounced throughout the year, with GDP growth arising mainly from productivity improvements.
What about consumer sentiment?
While we don’t foresee significant improvements in consumer sentiment, which is currently less than optimistic, we have commented previously on the disconnect between sentiment and actual spending. Despite these sentiment challenges, we expect solid fundamentals to be the key driver of consumer spending once again in 2026.
For more on retail sales and the consumer, visit NRF’s Center for Retail & Consumer Insights.