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Economic Forecasts

Hurricane Recovery Pushes Up Sales

Kiplinger's latest forecast on retail sales and consumer spending

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In the hurricanes’ aftermath, sales of autos, gasoline and building materials surged. Sales rose a strong 1.6% in September as many sought to replace flood-ravaged cars in Texas and repair damaged homes. Restaurant business picked up, and a spike in gasoline prices from damage to refineries also contributed.

Excluding gasoline, 2017’s sales are likely up 3.8%, the same as 2016’s pace. Building materials should rise 8.0%, up from last year’s 5.7%. Restaurant sales will rise 3.3%, down from last year’s 5.6%. Most other categories will look like last year’s.

E-commerce sales will grow 15% this year, the same as in 2016. E-commerce has shown remarkably solid growth over the past seven years, and will account for 9% of retail sales (13% of all goods sales) by the end of this year. In-store sales minus building materials will inch up 1.8%, a slight pickup from last year’s 1.4% gain.

Restaurant sales are now growing at a more sustainable 3.0% pace, down from 5.5% in 2016. Sales grew strongly for six years straight and are due for a breather. Some chains will find expanding harder because of labor shortages. Higher minimum wages will boost menu prices.

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2018 sales, excluding gasoline, will grow 4.0%, slightly higher than in 2017. Auto sales will plateau after years of strong growth, and sales of building materials will settle down to a more normal pace of 5%. Restaurant sales growth will continue modestly. The growth of in-store sales other than building materials should edge up to 2.1%, and e-commerce sales will grow by another 15%.

SEE ALSO: 6 Retailers That Can Stand Up to Amazon

Source: Department of Energy, Price Statistics