NRF Forecasts Modest Holiday Sales Gains

Consumer spending during the holidays is expected to reach record levels with growth of between 3% to 4% forecasted, according to the National Retail Federation (NRF). Total retail sales for the year’s final two months of the year are expected to be between $957.3 billion to $966.6 billion. 

Despite a slower growth rate compared with the past three years, when trillions of dollars of stimulus led to unprecedented rates of retail spending during the pandemic, this year’s holiday spending is consistent with the average annual holiday increase of 3.6% from 2010 to 2019, officials with the NRF said.

“It is not surprising to see holiday sales growth returning to pre-pandemic levels,” said Matthew Shay, president and CEO of the NRF. “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”

Online and other non-store sales, which are included in the total, are expected to increase between 7% and 9% to a total of between $273.7 billion and $278.8 billion. That figure is up from $255.8 billion last year.

“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” said Jack Kleinhenz, the NRF’s chief economist. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.”

He noted that the composition of spending from goods to services will also define holiday sales trends as the amount of spending on services is back in line with pre-pandemic trends.

To meet the demand of the holiday season, NRF expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires in 2022. Some of this hiring may have been pulled into October to support retailers’ holiday buying events in October. 

NRF's holiday forecast is based on economic modeling that considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit and previous retail sales. NRF’s calculation excludes automobile dealers, gasoline stations and restaurants to focus on core retail. NRF defines the holiday season as November 1 through December 31.

The federation’s latest holiday survey conducted by Prosper Insights & Analytics, which is separate from the holiday sales forecast, shows 43% of holiday shoppers planned to start making purchases before November. The survey also found consumers plan to spend $875 on core holiday items including gifts, decorations, food and other holiday-related purchases this year.

Additional holiday information is available on NRF’s Winter Holidays web page.