Good News For Retail Investors

The retail sector as a whole performed "great" in the first half of 2018, and the outlook for the full year is even stronger than expected, according to Matthew Shay, president and CEO of the National Retail Federation.

What Happened

Total retail sales were expected to rise between 3.8 percent and 4.4 percent in 2018, but the sector's momentum since the start of the year suggests a growth rate of at least 4.5 percent is likely, Shay said as a guest on CNBC's "Squawk Box" segment Monday morning.

The 4.5-percent growth projection factors in the typical seasonal uncertainty seen in the fourth quarter and inflation concerns, and the actual figure could be as high as 4.8 percent, Shay said. 

Why It's Important

The NRF's revised forecast to the upside can be attributed to the benefits of tax reform and regulatory reform, the organization's president said. Another factor: Consumers remain confident at a time when unemployment rates are low and savings are higher.

What's Next

The big question mark moving forward is how consumers will react to potentially higher retail prices on goods impacted by import duties, Shay said. It is not yet clear if retailers will be able to pass on higher prices to consumers as trade disputes play out, he said. 

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