NRF Forecasts Strong 4.4% Retail Sales Growth for 2026 Amid Economic Uncertainties

Retail Sales Poised for Significant Growth

The National Retail Federation (NRF) has released a robust forecast predicting a 4.4% increase in U.S. retail sales for 2026, projecting a total of $5.6 trillion. This growth rate surpasses the 3.6% average annual sales increase seen over the past decade, excluding the atypical pandemic years of 2020-2022. The forecast was unveiled during the NRF's sixth annual State of Retail & the Consumer virtual event.

NRF President and CEO Matthew Shay expressed optimism, stating, “Consumer spending was a steady and reliable engine of growth in 2025, even as broader economic conditions fluctuated. We expect that consumer resilience to continue into 2026, with household spending once again serving as a pillar of economic support.”

Economic Headwinds and Consumer Resilience

Despite acknowledging escalating global uncertainties, including renewed tensions in the Middle East and ongoing trade policy challenges, the NRF remains optimistic about the underlying fundamentals of the U.S. economy. NRF Chief Economist Mark Mathews noted, “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 forecast takes into account a softening labor market with muted non-farm employment growth expected throughout much of the year. However, the unemployment rate is projected to remain below 4.5%. Furthermore, while consumer sentiment is not predicted to improve significantly, the NRF highlights that sentiment has historically shown a disconnect from actual spending patterns. Solid income growth, stable household balance sheets, and labor market stability are expected to underpin continued consumer activity.

Drivers of Growth

A key factor supporting the sales forecast is the anticipated boost from larger tax refunds associated with tax cuts enacted under the Working Families Tax Cut Act, which is expected to provide a modest lift to consumer activity in the first half of the year. The NRF’s projection is presented in nominal terms, and while inflation is expected to remain above the Federal Reserve’s target through midyear before easing in the third quarter, a significant portion of the projected sales growth is anticipated to reflect real gains rather than solely inflation-driven increases.

The spending outlook indicates a continued bifurcation between higher- and lower-income consumers, with higher-income households projected to drive the majority of growth across various retail categories.

Methodology and Context

This year, the NRF utilized a new economic forecasting model developed in partnership with Oxford Economics. This updated methodology underpins the bullish guidance, largely relying on consumer resilience bolstered by fundamental economic strengths and enhanced by anticipated tax refunds.

The NRF’s forecast contrasts with some other analysts who have offered more cautious outlooks. For instance, Wells Fargo economists have identified signs of growing consumer weakness, and New England Consulting Group researchers suggest retail sales growth might struggle to reach 3% due to rising fuel costs, household expenses, and increasing credit card debt. Moody’s Ratings has predicted real consumer spending growth could slow to around 1.5% in 2026.

Mark Mathews clarified that events such as the Iran war were not factored into the current forecast due to high uncertainty, but the NRF will continue to assess potential impacts and re-forecast if circumstances change.