Key Takeaways
- NRF expects 2026 holiday sales to grow 4.2% to $1.013 trillion, with nearly half of that growth coming from real consumer spending rather than higher prices.
- Higher-income shoppers will drive much of the season’s spending, though most lower-income groups are now spending more than they did a year ago.
The National Retail Federation (NRF) expects holiday sales to grow 4.2% this year to $1.013 trillion, as shoppers keep spending despite persistent inflation and uneven confidence in the economy.
The forecast, released Oct. 15 during NRF’s annual holiday press call, marks an acceleration from 2025, when holiday sales rose 3.1% to $972 billion. Matthew Shay, NRF President and CEO, called consumers the “unsung heroes of our economy” that have shown strength throughout 2026 and that NRF expects it to carry into November and December.
“We think our forecast reflects and points to another very strong holiday season,” said Shay. “Throughout the year, consumers have repeatedly shown that holidays and spending on loved ones are priorities. That’s actually been true for many years, particularly the end-of-year holiday season, We’re confident that pattern is going to continue.”
Growth Despite Economic Headwinds
Inflation will account for part of the gain. Mark Mathews, NRF Chief Economist, said nearly half of the 4.2% forecast should come from real consumer spending growth, with the rest driven by higher prices, with the experience differing from household to household.
“While the overall outlook is positive, we do expect that the experience of individual households will vary significantly based on income levels and wealth, and exposure to higher everyday costs like gasoline and other household essentials,” he said.
What’s Driving NRF’s $1 Trillion Holiday Forecast?
Mathews said the backdrop for the forecast is “a consumer economy that remains remarkably resilient.” NRF’s September Retail Monitor showed 12 consecutive months of retail sales growth, and he expects some of that momentum to push into the holidays. Matthews outlined five factors behind the forecast: inflation, income, the labor market, household wealth and consumer confidence.
NRF expects core goods inflation to average 2.5% in 2026, up from 1.6% in 2025. Higher diesel prices are raising shipping costs, and surging memory prices are pushing up costs for electronics, a key gift category. Larger tax refunds offset higher gas prices through the first eight months of the year, but Mathews said that effect has worn off. “If gas prices remain higher, we do expect that this will have a larger impact on households at the lower end of the income spectrum,” he said.
Still, he expects goods prices to run below headline inflation “as retailers respond to a price-conscious consumer.” Asked whether retailers would add surcharges to cover freight costs, Matthews said competition makes that difficult.
“I think it’s really, really hard for any retailer to go out there and to have higher prices than anybody else,” he said, adding retailers absorbed some tariff costs expect “some more of that” with freight.
How K-Shaped Spending Will Affect Holiday Sales
Wage growth has come under pressure from inflation. Recent federal revisions raised real disposable income growth, mostly because of higher interest income, but Mathews said those gains likely favor higher-income households. He expects shoppers to “remain deliberate and value-conscious in their choices, even as they prioritize gifts and celebrations.”
Mathews said the spending divide is “becoming more pronounced.” Rising food and gas prices weigh more on moderate-income households, while growing financial wealth supports spending by higher-income households. Consumer confidence readings remain weak but NRF’s research finds confidence “is a pretty poor predictor of actual spending” as income, jobs and wealth matter more.
The result is a K-shaped pattern, with higher-income shoppers spending faster than lower-income shoppers. Matthews said this year’s K looks different, though. In some sectors, the top 10% of spenders account for as much as 70% of sales and reaching the high end of the forecast depends on that group.
“Last year, most of the lower-income deciles were actually in the negative year over year,” he said. “This year, most groups are actually in the positive, and I think that accounts for some of the greater strength we’re seeing in retail sales this year. We would have to expect higher-income consumers to actually step in and spend more, and maybe shift some of that spending out of services into goods.”
Why NRF Doesn’t Split Online and In-Store Sales and How AI Fits In
NRF doesn’t separate online and in-store sales in its forecast as shoppers and retailers no longer draw a clear line between the two, and companies attribute sales differently. One retailer may count a buy-online, pick-up-in-store order as online; another counts it as in-store.
“A sale is a sale,” Mathews said. “The most important thing is that you get your customer what they want in an efficient way at the best price possible. I think [physical] stores remain incredibly relevant.”
Shay expects artificial intelligence to play a larger role this season. Last year, NRF saw “a real spike in the number of consumers using AI as they went through their holiday shopping season,” tying growth to the amount of information and choice available to shoppers. “Deploying the AI tools and increasingly using agents as you go through that journey, I think it’s going to be even more prevalent this year than last.”
How Many Seasonal Workers Will Retailers Hire in 2026?
NRF expects retailers to hire between 325,000 and 375,000 seasonal workers, in line with last year’s estimated 356,000 seasonal jobs. Similar to last year, retailers remain cautious amid higher gas prices, persistent inflation, higher interest rates and elevated consumer debt, resulting in a measured approach to seasonal hiring.
Shay said retailers are operating in a “low-hire, low-fire labor market. Retailers will remain careful but responsive in terms of aligning staffing and other resources with consumer demand across stores, distribution and fulfillment centers, and other operations.”
NRF’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. NRF defines the holiday season as Nov. 1 through Dec. 31.
