THE SHOP

January '18

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6 THE SHOP JANUARY 2018 F air weather ahead. That's the economic fore- cast for 2018. And retailers should particularly benefit from an improving employment picture, growing disposable consumer income and an easy credit environment. "The United States economy continues to power forward," says Sophia Koropeckyj, managing director of industry economics at Moody's Analytics, a research firm based in West Chester, Pennsylvania. "Further- more, for the first time during the nation's eight-year expansion, there are no serious impediments to growth." Brisk tailwinds should keep the economy in full sail, according to predictions. "Consumers are benefiting from a strong job market, their balance sheets are healthy and credit is flowing freely," says Koro- peckyj. "A revival in corporate profitability, record stock prices and rock-bottom bor- rowing costs are buoying businesses." Even the global picture is brighter. "All of the major economies are expanding in unison for the first time in a decade." HAPPY RETAILERS Retailers, in particular, can look forward to improving sales, experts believe. "We forecast core retail sales will increase by 4.7 percent in 2018," says Scott Hoyt, senior director of consumer economics for Moody's Analytics. "That's an improve- ment over the 3.8-percent increase of 2017, which was virtually flat with the previous year." (Core retail sales exclude volatile auto and gasoline segments, he notes.) That flat part requires explanation. "2017 was somewhat disappointing, largely because of a continuation of the previous year's deflationary environment and resultant weak retail pricing power," says Hoyt. "However, the pace of deflation is moderating." Pricing should also be supported by a lower-trending dollar and a strengthening of the global economy. For 2018, Moody's expects Gross 2018 RETAIL FORECAST Indicators point toward a strong year ahead. By Phillip M. Perry Early indicators point toward a successful 2018, with retailers benefitting from an improving employment picture, growing disposable consumer income and an easy credit environment. "The United States economy continues to power forward," says Sophia Koropeckyj, managing director of industry economics at Moody's Analytics. 6 THE SHOP JANUARY 2018

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