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NRF Predicts up to 3.5% Increase in Holiday Spending Despite Economic Headwinds

NRF predicts holiday spending to increase this year.
Photo credit: adobe.stock.com

The National Retail Federation predicts that this year’s holiday spending will increase by 2.5% to 3.5% over 2023 despite continued concern about a consumer pullback. This would equate to between $979.5 billion and $989 billion in total holiday spending from Nov. 1 to Dec. 31, compared to the $955.6 billion spent during the same period last year. 

NRF holiday sales and 2024 forecast.
Image courtesy NRF

A number of factors have given analysts and retailers cause for concern about this year’s crucial holiday period, including a shopping season that is six days shorter than last year and the impact of the recent hurricanes Helene and Milton. The upcoming presidential election also may impact consumer confidence (and therefore spending); however, the NRF acknowledged that it is nearly impossible to measure the actual effect of the election on current or future spending.

Despite all these potential headwinds, NRF President and CEO Matthew Shay pointed out that “the economy remains fundamentally healthy and continues to maintain its momentum heading into the final months of the year. The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth,” he said in a statement.  

The NRF’s holiday forecast is based on a range of economic indicators, including consumer spending, disposable personal income, employment, wages, inflation and previous monthly retail sales data. The calculation focuses on core retail, excluding automobile dealers, gasoline stations and restaurants.

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Online Sales Remain Important Piece of Holiday Pie

The NRF’s holiday forecast is consistent with its prediction that annual retail sales for 2024 will be between 2.5% and 3.5% higher than in 2023. A primary contributor of overall retail sales growth is expected from online shopping, and Adobe Analytics anticipates that U.S. online sales will grow 8.4% over 2023 to hit $240.8 billion during that Nov.1-Dec. 31 shopping window.

“We remain optimistic about the pace of economic activity and growth projected in the second half of the year,” said NRF Chief Economist Jack Kleinhenz in a statement. “Household finances are in good shape and there’s an impetus for strong spending heading into the holiday season, though households will spend more cautiously.”

In preparation for the holiday rush, the NRF expects retailers to hire between 400,000 and 500,000 seasonal workers this year, a process that began for some retailers in October to support early holiday sales events. That total hiring number would represent a slight decrease from 2023, when retailers hired 509,000 seasonal associates.

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