Executive Summary

• US gas prices are seeing a double-digit increase year over year, threatening to pressure consumers’ disposable incomes.
• Traditionally, higher gas prices have prompted a weakening in discretionary retail sales growth. However, we have not seen this pattern in recent months.
• Consumer sentiment and retail sales have so far held up, as tax reforms and solid economic growth provide an otherwise-benign environment.
• We remain bullish on the prospects for US retail in 2018. We expect total retail sales excluding automobiles and gasoline to rise by around 4.4% to $3.6 trillion.