The National Retail Federation (NRF) has projected a moderation in US holiday sales growth this year, citing economic factors like rising interest rates. According to the NRF, the retail industry can anticipate sales growth of 3% to 4% in November and December compared to the previous year. In contrast, holiday sales in 2021 saw a growth of over 5%, slightly below the initial forecast of 6% to 8% growth. It’s important to note that the NRF’s projections are not adjusted for inflation.
Economic Challenges Impacting US Holiday Sales
The current economic landscape presents American consumers with a rapidly growing economy, albeit accompanied by concerns about inflation, increasing interest rates, and the resumption of student loan payments. This has placed some financial strain on consumers, leading to a dip in consumer confidence, which reached a five-month low in October.
Consumer Spending and Confidence
Matt Shay, the President and CEO of the NRF, suggested that these combined factors might lead to a moderation in consumer behavior compared to the robust holiday spending of previous years. However, he also emphasized that over 90% of adults are expected to participate in holiday celebrations and contribute to the economy by spending.
Economic Indicators and Spending Patterns
Despite economic challenges, the US job market remains strong, and prices for certain items, including clothing, have decreased from their pandemic-induced highs. Consequently, consumer spending continues in various categories, such as sporting equipment, luggage, apparel, furniture, and restaurant meals, all of which saw over 5% growth from the previous quarter between July and September.
Outlook and Consumer Sentiment
Jason Gaughan, Head of Consumer Credit Card Products at Bank of America, expressed optimism about the upcoming holiday season, highlighting the mixed economic signals. However, a Bank of America survey revealed that approximately two-thirds of adults are concerned about financial stress during the holidays. Many shoppers are anticipated to seek substantial discounts, with no significant shift towards earlier holiday shopping in October.
Bank of America, using a different methodology from the NRF, foresees a more moderate holiday spending season. They expect comparable sales to increase by approximately 0.6% this year, compared to a 3.3% gain in the previous year.
