US holiday sales are projected to exceed $1 trillion for the first time, according to a statement by the National Retail Federation. However, the growth rate is expected to decelerate due to economic challenges impacting consumer confidence.
The holiday season, encompassing key shopping dates like Thanksgiving, Black Friday, Cyber Monday, and Christmas, is crucial for major retailers’ revenue generation. Factors such as persistent inflation, repercussions of the Trump administration’s tariffs, and the recent federal government shutdown pose uncertainties, prompting shoppers to be more cautious about extravagant purchases.
NRF CEO Matthew Shay highlighted that while American consumers display cautious sentiment, their underlying strength remains intact. NRF’s chief economist, Mark Mathews, noted a trend among lower-income consumers shifting their focus towards essential purchases while trimming non-essential expenses, particularly in service-related sectors like travel, recreation, and dining out.
Various forecasts have suggested a subdued holiday shopping season this year, with companies like Tapestry, Under Armour, and Canada Goose offering muted outlooks. Mathews emphasized that consumers are currently inclined towards seeking discounts, prompting retailers to engage in promotional activities to maintain competitiveness in the market.
Projections indicate a 3.7 percent to 4.2 percent increase in sales during November and December, reaching $1.01 trillion–$1.02 trillion, compared to last year’s $976.1 billion, which saw a 4.3 percent surge. The NRF anticipates retailers to recruit between 265,000 and 365,000 seasonal employees, a decrease from the previous year’s 442,000 hires, reflecting the softer labor market conditions.
NRF’s forecast methodology involves economic modeling utilizing various indicators like consumer spending, employment rates, wages, and historical retail trends, excluding figures from the auto, gas, and restaurant sectors.