NRF: Holiday Season on Track to Beat Original Forecast; Growth Could Reach 11.5% over 2020

NRF Holiday Sales 2021 Forecast

Despite supply chain disruptions, inflation and the new COVID-19 Omicron variant, the National Retail Federation is now saying that 2021 holiday sales increases could actually beat original forecasts. The NRF originally projected that holiday sales would increase by 8.5% to 10.5% compared to 2020, but Jack Kleinhenz, Chief Economist at NRF, said he now thinks that number could go as high as 11.5%.

The initial forecast was made in late October, when late-summer growth in COVID-19 cases was still a key factor and before October retail sales data had been released.

Lackluster Cyber Week sales in the U.S. were offset by early shopping, as both consumers and retailers looked for ways to mitigate potential product shortages and shipping delays: October retail sales as calculated by NRF were up 10.5% YoY. With shopping starting earlier, the Thanksgiving weekend “now helps to mark off the holiday season rather than serving as the kickoff it once was,” said Kleinhenz.

“The holiday season clearly looks to be off to a good start,” said Kleinhenz in a statement. “Consumers remain in solid financial shape and do not appear to be stretched. With the momentum we’ve seen so far likely to continue, it seems probable that we will exceed our initial projection.”


This aligns with new global forecasts from Euromonitor, which predict that after contracting by 3.1% in 2020, global real GDP will increase by 5.7% in 2021 and 4.6% in 2022. The research firm did point out though that “the global economic outlook at the end of 2021 remains constrained by an ongoing mismatch between consumer demand and the availability of certain services.”

“Consumers and retailers have both revised their playbooks and broken with previous traditions,” noted Kleinhenz. “The question is, how have factors ranging from economic indicators to the twists of the COVID-19 pandemic affected the season so far, and what role will they play in the weeks that remain? There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights.”

Kleinhenz did say the COVID-19 Omicron variant was a “wild card raising uncertainty around the economic outlook,” but that it’s too early to predict the actual impact on holiday sales or the economy as a whole.

The first official holiday results won’t be known until the Census Bureau reports November sales on Dec. 15, but overall consumer spending – beyond just retail sales – rose by 1.3% in October. That was the largest monthly increase since March, indicating no sign of spending pullbacks despite inflation-induced price increases. The NRF also pointed out that despite an overall year-over-year inflation rate of 5% in October, core retail categories were up only 3.3%, according to the Personal Consumer Expenditures Price Index.

These increased retail sales and strong economic indicators, such as decreases in unemployment claims and increases in disposable personal income, come despite falling consumer confidence. The University of Michigan Index of Consumer Sentiment declined to 67.4 in November, its lowest level in a decade, but Kleinhenz said spending data is a more relevant measure of consumer behavior.

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