US Retail Sector NAICS 44, 45

Apr 20, 2026 - Retail Sales Extend Growth Streak Despite Inflation Pressures

• The US retail sector continues to demonstrate resilience, with sales increasing for the sixth consecutive month in March despite persistent inflation and weak consumer sentiment, according to the latest National Retail Federation’s CNBC/NRF Retail Monitor. In March, total retail sales (excluding autos and gas) rose 0.4% month over month and 6.6% year over year, supported in part by tax refunds averaging $3,521, up 11.1% from last year. Growth was broad-based, led by health and personal care (+12.3% year over year), apparel (+10.9%), and sporting goods (+10.9%), indicating steady consumer spending on essential and discretionary categories. However, softness in areas like building materials (-0.47% year over year) suggests ongoing pressure in more cyclical segments. Overall, consumers remain engaged but value-conscious, reinforcing the need for retailers to balance pricing strategies with demand.
• According to the March ISM Services PMI, the retail sector is underperforming within an otherwise expanding services economy. While the Services PMI remained in growth at 54%, retail was one of only three industries in contraction. Retail also showed declines across key demand indicators: it was the only industry reporting a drop in new orders, even as the overall New Orders Index rose to 60.6%, and it experienced decreases in business activity and backlog of orders. Employment in retail is weakening as well, contributing to a broader Employment Index contraction at 45.2%. At the same time, retailers face rising cost pressures, with the Prices Index surging to 70.7%, while inventory sentiment remains elevated, indicating excess stock. Overall, retail is being squeezed by soft demand, rising costs, and operational pressures despite broader sector growth.

• A recent Wall Street Journal report highlights growing legal and operational risks for US retailers tied to tariff policy. Costco faces a proposed nationwide class-action lawsuit seeking refunds for tariff-related price increases after tariffs were ruled unlawful. The Court of International Trade has ordered the government to refund approximately $166 billion in tariff revenue, though timing and distribution remain uncertain. At the same time, Costco is among hundreds of companies that have sued the US government to recover tariff payments as importers, adding another layer of litigation risk. According to the WSJ, retailers used a mix of price increases, supplier negotiations, and cost absorption, making consumer-level refunds difficult to calculate. With more than 2,000 related cases filed, the situation underscores how tariffs create pricing complexity, legal ambiguity, and potential financial liability across the US retail industry.
• The National Retail Federation (NRF) projects US retail sales will grow 4.4% in 2026 to $5.6 trillion, outpacing the 10-year average of 3.6%, reflecting continued consumer resilience despite economic uncertainty. According to NRF, household spending remains a “pillar of economic support,” driven largely by higher-income consumers, while spending remains uneven across income groups. The outlook is supported by income growth, stable labor markets, and unemployment below 4.5%, though job growth is expected to soften. Inflation is projected to remain elevated through midyear before easing, with a portion of retail growth representing real gains rather than price increases. NRF also notes modest near-term support from tax refunds, even as geopolitical tensions and trade policy risks persist. Overall, the forecast signals steady but uneven growth for the US retail industry in 2026.