by Retail sales are expected to grow to $5.6 trillion in 2026
WASHINGTON — Finally, some good news. During the National Retail Federation’s sixth annual State of Retail & the Consumer virtual event, which examines the health of American consumers and the retail industry, the organization announced that it forecasts retail sales in 2026 will grow by 4.4% over 2025 to $5.6 trillion.
The National Retail Federation, the world’s largest retail trade organization, generated these numbers based on a newly enhanced forecasting system it developed in collaboration with independent economic advisory firm Oxford Economics.
“Consumer spending was a steady and reliable engine of growth in 2025, even as broader economic conditions fluctuated,” Matthew Shay, president and CEO of the NRF, said in a press release. “We expect that consumer resilience to continue into 2026, with household spending once again serving as a pillar of economic support.”
According to the same news release from the NRF, “The 2026 sales forecast compares with 3.6% average annual sales growth over the last 10 years, excluding the pandemic period from 2020 to 2022 when growth was atypical.”
Mark Matthews, the NRF’s chief economist and executive director of research, stated that spending continues to be bifurcated between higher- and lower-income consumers. This tracks with what outlets, including the New York Times and Forbes, have reported about America’s K-shaped economy, defined by U.S. Bank as “an uneven economy where some segments of the population thrive while others struggle.” Those with disposable income are continuing to spend on travel, clothing and furnishings, while those with lower income are cutting out or reducing what they deem unnecessary purchases. According to Matthews, higher-income households are driving the majority of growth in spending across a range of retail categories.
Global factors are also influencing consumer spending habits.
“Renewed tensions in the Middle East and the ripple effects across global markets are adding more uncertainty to the economic landscape,” Matthews 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.”
Using data from the U.S. Bureau of Economic Analysis combined with NRF calculations, the NRF also concluded that in recent years, goods inflation is lower than services inflation. In 2025, services inflation was 3.5%, compared to 0.7% for goods. This is a good sign for the retail economy.
The NRF noted that consumption drivers in 2026 will be caused in part by larger refunds from tax cuts under the Working Families Tax Cut Act. The NRF also projects inflation will “remain elevated through midyear before easing by the third quarter, offering some relief to households as the year progresses.”
Throughout 2026, it will be interesting to see how the overall retail growth breaks down in the furnishings category. Higher-income consumers will likely continue to purchase furnishings either for new homes or for redecoration projects, while lower-income consumers will likely remain cautious. Home News Now is in the process of publishing findings from the spring edition of Consumer Insights Now, sponsored by Bread Financial. The first of five installments, which was released earlier this week, covers the furniture spending plans of consumers earning $150,000 per year or more.
