With the holiday shopping season already underway, the National Retail Federation said Thursday (Nov. 2) that U.S. consumers are estimated to spend about $960 billion between Nov. 1 and Dec. 31. The sales forecast is up 3%-4% compared to a year ago.
The forecast is not adjusted for inflation which has declined in recent months. The September Consumer Price Index (CPI) reading was 5.7%, excluding food and energy. The October CPI is forecast lower at 3.8%.
The trade group said consumers intend to spend $875, with $620 going toward the purchase of gifts and $255 for seasonal items like food and decorations. Last year, per capita spending was $833, down from $879 in 2021 and $880 in 2020. The per capita spending level this year is the lowest recorded since 2018, according to the NRF.
Despite a slower growth rate compared with the past three years, when federal stimulus dollars 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, NRF reports.
“Consumers remain in the driver’s seat and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” NRF Chief Economist Jack Kleinhenz said. “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.”
Kleinhenz said consumer spending has kept the economy afloat in recent months but the composition of spending from goods to services will also define holiday sales trends.
“Service spending growth is strong and is growing faster than goods spending. The amount of spending on services is back in line with pre-pandemic trends.,” he said.
NRF CEO Matthew Shay said 92% of consumers plan to celebrate events such as Christmas, Hanukkah or Kwanzaa this year, on par with last year.
Similar to previous years, 43% of holiday shoppers say they generally start their holiday shopping before November. The top reasons people begin their shopping ahead of time are to spread out their budget (60%), avoid the stress of last-minute shopping (46%), and avoid crowds (45%). The majority (62%) expect they won’t finish shopping until December, NRF reports.
“However, early sales may sway consumers to shop even earlier,” Prosper Executive Vice President of Strategy Phil Rist said. “This year, 70% of holiday shoppers say they are considering taking advantage of October sales events to pick up holiday gifts, décor and other items on their list.”
While physical stores are well-stocked with holiday items, NRF said 58% of consumers will do some shopping online, 49% will shop at department stores, 48% at discount stores, and 44% at supermarkets. NRF said 13% will look for bargains at thrift stores or outlet stores.
NRF reports gift cards will be the most popular gift this year, with 55% of consumers wanting to receive them. The NRF report also found that 49% want to get clothing or accessories, 28% want video games or other media, and 25% want personal care or beauty products. Also, 23% of holiday shoppers said they planned to give a gift of experience.
When shopping for gifts, 62% say sales and promotions are even more important to them this year than last year. About one-third (36%) say they are cutting back in other areas to cover the cost of holiday items, 30% are purchasing gifts for fewer people, and another 27% are buying less for themselves, NRF reports.