Holiday Sales to Jump as Shoppers Weather Challenges

RAPAPORT... US holiday spending is set to top last year's record figure, as consumers dip into their savings and rely on credit to provide gifts for loved ones, the National Retail Federation (NRF) has forecast.Retail sales in November and December will grow between 6% and 8% year on year, for a total of $942.6 billion to $960.4 billion, the organization predicted last week. The average increase over the past 10 years was 4.9%, while sales in 2021 rose 13.5% to $889.3 billion."While consumers are feeling the pressure of inflation and higher prices, and while there is continued stratification with consumer spending and behavior among households with different income levels, consumers remain resilient and continue to engage in commerce," said NRF CEO Matthew Shay. "In the face of these challenges, many households will supplement spending with savings and credit to provide a cushion and result in a positive holiday season."Online and other non-store sales are set to climb 10% to 12% to reach between $262.8 billion and $267.6 billion, from $238.9 billion in 2021. The expected increase is sizable considering last year saw "extraordinary growth" in digital channels as consumers turned to online shopping during the pandemic, NRF explained. However, while e-commerce will remain important, the NRF expects consumers to shift back to in-store purchasing and more traditional holiday shopping experiences, it noted.Consumers have also begun shopping earlier this year to spread out their budgets, given the rising inflation, as well as to take advantage of sales. On average, consumers plan to spend $833 on gifts and other holiday items, on par with last year.Although spending is expected to be "healthy," several factors could still challenge sales."This holiday season cycle is anything but typical," said NRF chief economist Jack Kleinhenz. "NRF's holiday forecast takes a number of factors into consideration, but the overall outlook is generally positive as consumer fundamentals continue to support economic activity. Despite record levels of inflation, rising interest rates and low levels of confidence, consumers have been steadfast in their spending and remain in the driver's seat."NRF's holiday forecast is in line with its prediction that retail sales for the full year will grow between 6% and 8% to more than $4.86 trillion, it added.Image: People shopping in a mall in Houston, Texas. (Shutterstock)