Amid the ongoing Iran conflict and tariff-driven uncertainty, in addition to other factors, like mixed economic signals and a sluggish employment market and rising energy prices, it stands to reason that conditions like this could lead to a slowdown in consumer spending levels.
But yesterday the National Retail Federation (NRF) called for retail sales gains in 2026, to the tune of a 4.4% annal increase to $5.6 trillion, according to a forecast it developed in a partnership with Oxford Economics, an independent economic advisory firm. NRF said its forecast is based on its own definition of core retail sales and excludes auto dealers, gas stations, and restaurants.
What’s more, despite the many ongoing issues, at the moment, NRF observed that this year’s forecast surpassed the 10-year average annual sales growth rate over the last 10 years, at 3.6%. NRF President and CEO Matthew Shay said that consumer spending represented what he called a steady and reliable growth engine in 2025, while broader economic conditions saw fluctuation. And he added that, for 2026, NRF expects consumer resilience to remain intact, paced by household spending.
“Renewed tensions in the Middle East and the ripple effects across global markets are adding more uncertainty to the economic landscape,” NRF Chief Economist and Executive Director of Research Mark Mathews said. “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.”
The NRF executive also noted that the NRF forecast remains bifurcated between higher- and lower-income consumers, with higher-income households driving the majority of growth in spending across a range of retail categories. He said consumer activity is expected to receive a modest boost in the first half of the year, due to larger refunds associated with tax cuts enacted under the Working Families Tax Cut Act. As for inflation, he said it is projected to remain elevated through mid-year before easing by the third quarter, offering some relief to households as the year goes on.
In comments made at NRF’s State of Retail & the Consumer virtual event yesterday, Shay said that 2025 retail sales were up nearly 4%, coming in at a record $5.4 trillion. As for reasons, the economy remains on solid footing in 2026, Shay pointed to the trio of low unemployment, steady wage gains, and higher tax refunds—while also acknowledging ongoing policy uncertainty continues to weigh on both consumer and business confidence.
And, in looking at its 2026 forecast, NRF’s Mathews took a look back at the last 10 years, excluding the pandemic period from 2020 to 2022, when growth was “atypical,” he said retail sales growth averaged 3.6%, making the 4.4% 2026 forecast a “stronger-than-normal year,” he said.
“We expect this strength continue in 2026, with consumer spending once again providing key support for the economy,” he said. “In the first half of 2026, we expect a degree of 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 fall off by Q3, providing a bit of relief to customers in the latter half of the year. While at a macro level, we continue to expect the consumer to be strong, we also anticipate that this will not be uniform across all income groups.”
To be clear, while economic conditions and signals remain mixed, to a large degree, the NRF forecast provides reason for optimism, at a time when uncertainty remains firmly intact, for both the macroeconomy and the freight economy alike. Will 2026 retail sales rise to the level of NRF’s forecast? That remains to be seen, but it will be interesting to see how things go along the way.
