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The National Retail Federation (NRF) is anticipating a tamer holiday shopping season after two years of heavy spending in the wake of the pandemic.
The group’s annual holiday forecast predicts that spending will increase 3%–4% year over year between November and December, bringing the total to between $957 billion and $967 billion.
This marks a significant slowdown from 2020 and 2021, when spending increased 9.1% and 12.7%, respectively, but it is “very much in line with or frankly slightly better than pre-pandemic averages,” NRF CEO Matthew Shay told reporters during a press conference on Thursday.
Of course, this is no pre-pandemic economy. Interest rates, inflation, and gas prices remain elevated, and yet consumers are still showing “strength and resilience,” Shay said.
- NRF Chief Economist Jack Kleinhenz explained that a strong job market and steady growth in wages, which are now rising faster than inflation, are helping consumers stay “out and about” this holiday season.
- And retailers are preparing accordingly. The NRF anticipates 345,000 to 450,000 seasonal hires this year, compared to 391,000 in 2022.
As for tailwinds, Shay noted that the NRF is keeping an eye on gasoline prices, credit card balances, and the impact of continued inflation—as well as external pressures such as a possible government shutdown and geopolitical tensions around the world.
Winter break: On the upside, Kleinhenz pointed out that lower heating costs this winter could help buoy spending in other categories. He cited the latest forecast from the Energy Information Administration, which expected “heating prices for US households to remain relatively flat, or possibly decrease this season.”
Spillover effect: The NRF offered an important caveat to its own analysis, however. Based on a separate survey it conducted with Prosper Insights & Analytics, 43% of consumers are planning to begin holiday shopping prior to November. This means that potentially a good chunk of holiday spending is falling outside the group’s forecast.
Shay noted that it wouldn’t be fair to compare spending between November and December now with the same period 20 years ago. “It wouldn’t really be an accurate comparison, because back then we know consumers really did start their shopping much later in the holiday season.”