If the forecast from the National Retail Federation is right, it’s going to be a massive holiday spending season.
Despite economic nervousness and rising prices, the forecast is for shoppers to collectively spend between $1.01 trillion and $1.02 trillion in November and December. That would mark an increase of 3.7% to 4.2% compared with last year, when retailers brought in $976 billion in holiday sales, a 4.3% increase from the prior year, the group said. The survey results were reported by The Associated Press.
“We’re seeing really positive behavior and engagement from consumers, ” NRF President and CEO Matthew Shay told reporters on a call Thursday. “In fairness, that’s been somewhat of a surprise.”
Shay said more Americans are “growing selective” and are focused on discounts. And while spending is expected to be up again, the growth of that spending may be in decline.
That is still greater than the average increase of 3.6% between 2010 to 2019. Americans ramped up spending after that during the coronavirus pandemic. Holiday season sales rose 8.9% in 2020 and soared 12.5% in 2021, according to the NRF, the AP reported.
The group’s holiday forecast is based on economic modeling using various key economic indicators including consumer spending, disposable personal income, employment, wages, inflation and previous monthly retail sales releases. NRF’s calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail.
Holiday spending accounts for 19% of annual sales for the retail industry, though for some retailers the number is a lot higher, according to the NRF. And consumer spending in the U.S. is monitored closely because it drives about 70% of the nation’s gross domestic product.
According to the AP, the forecast this year arrives during the longest government shutdown in U.S. history. There has been no government data released on the jobs market or retail sales since the shutdown began 37 days ago.
“Forecasting is increasingly challenging in this environment,” Shay acknowledged.
The NRF forecast is in line with other estimates, however, which point to slowing growth.
Mastercard SpendingPulse, which tracks spending across all payment methods including cash, predicts that holiday sales will be up 3.6% from Nov. 1 through Dec. 24. That compares with a 4.1% increase last year.
