US holiday sales growth to moderate this year, NRF says

US holiday sales will grow at a slower pace this year amid economic headwinds such as higher interest rates, the National Retail Federation said Thursday.

The industry’s sales are expected to grow by 3% to 4% in November and December from a year earlier, the retail industry group said Thursday. Last year, holiday sales grew more than 5% from 2021, short of the initial forecast for 6% to 8% growth. The NRF’s projections, which predict holiday growth will return to levels similar to the average in the decade before the pandemic, aren’t adjusted for inflation. 

American consumers are confronting an economy that’s growing at a rapid pace despite recession concerns. Nonetheless, inflation, rising rates and the recent restart of student loan payments are creating financial strain, and consumer confidence, which measures spending plans and economic expectations, fell to a five-month low in October.

“Our sense is that the cumulative effect of all of these things is going to show some moderation in consumer behavior relative to the last few years of holiday spending,” Matt Shay, the NRF’s president and chief executive officer, said on a call with reporters. Even so, he added that more than 90% of adults will be celebrating the holidays: “They’ll be spending money and powering the economy.”

While there are signs of strain, the unemployment rate remains at a historical low and prices for some items, including apparel, have fallen from their pandemic peaks. This has helped the US shopping spree to continue. From July to September, spending on sporting equipment, luggage, clothing, furniture and restaurant meals all rose by more than 5% from the prior quarter. 

“There’s a lot of mixed economic information out there,” said Jason Gaughan, head of consumer credit card products at Bank of America, which also released projections for the holiday period this week. He said he’s “fairly optimistic on what we’re going to see this holiday season.”

Still, about two-thirds of adults say they’re worried about feeling financially stressed this holiday season, according to a Bank of America survey. Many shoppers are holding out for steep discounts, Gaughan said, noting that their data doesn’t show a shift to earlier holiday shopping in October.

Bank of America, which uses a different methodology than the NRF, expects a more moderate holiday spending season, with comparable sales up about 0.6% this year, versus a 3.3% gain last year.