The potential impact of these policies on immigration, tariffs, deregulation, and taxes could either stimulate or hinder economic progress, says the NRF.
“While the US economy has entered 2025 with a fair amount of momentum, the mix of policies being debated on immigration, tariffs, deregulation and taxes blur the economic outlook and its narrative, with many crosscurrents at work. While deregulation and tax cuts could provide positive momentum, immigration restrictions and tariffs could be a drag on the economy and have adverse effects. Although recent economic data remains strong, we are concerned about the downside risks,” said Kleinhenz.
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“Weak consumer perceptions and uncertainty from the lack of clarity regarding future government policies and regulations can significantly hinder business operations. That, in turn, can cause a hesitation in consumer spending and make it difficult for companies to make investment and hiring decisions. We are watching carefully and hoping for the best as much depends on how and when these policies are put in place.”
The warning follows as US President Donald Trump’s 25% tariff on imports from Mexico and Canada as well as 20% duties on Chinese goods came into force today (4 March 2025).
In response to the tariffs, the retail and fashion industry trade bodies and experts have already warned of chaos across supply chains.
Kleinhenz’s comments come as the NRF released the Monthly Economic Review: March 2025.
The report showed that the gross domestic product (GDP), adjusted for inflation, rose by 2.8% in 2024, driven largely by consumer spending, while the overall consumer spending unadjusted for inflation grew 2.8% year over year.
Sales of core retail, which excludes automobile dealers, gasoline stations and restaurants were up 3.6% unadjusted. Although there was a slight 0.9% decline in core retail sales from December to January after a vigorous holiday season, the year-over-year increase stood at 4.2%, indicating that consumer fundamentals remain robust early into 2025.
Data from Census Bureau revealed that e-commerce sales increased by 2.7% in the fourth quarter seasonally adjusted from the previous quarter and up 9.4% year over year. Sales in 2024 were up 8.1% from 2023 and accounted for 16.1% of total retail sales.
Inflation has been on the rise since October of the previous year, with sharper increases than expected in January. The Consumer Price Index rose by 3% year over year, and producer prices increased by 3.5%.
Consumer inflation expectations have jumped to 4.3% for this year, according to February’s University of Michigan Index of Consumer Sentiment, marking the highest anticipated inflation rate since November 2023 and possibly reflecting concerns over tariff-related price increases.
This accompanies a drop in the index itself, suggesting a second consecutive month of declining consumer confidence after a period of modest gains.
The latest data from US Census Bureau showed overall retail sales in January decreased by 0.9% to $723.9bn on a seasonally adjusted basis from the previous month but saw a 4.2% rise on an unadjusted basis compared to last year.
