NEW YORK (AP) — The National Retail Federation, the nation’s largest retail trade group, expects shoppers will spend more this year than last year, but their spending pace will slow given all the economic uncertainty.

The group forecast Thursday that U.S. holiday sales will rise 3% to 4% for November through December, compared with a 5.4% growth of a year ago. Sales for the two-month period will increase to between $957.3 billion and $966.6 billion, the group predicted.

The pace is consistent with the average annual holiday increase of 3.6% from 2010 to pre-pandemic 2019. Americans ramped up spending during the pandemic, which accounted for some outsized sales numbers. For the holiday 2021 season, sales for the two-month period surged 12.7%.

The forecast comes as shoppers keep spending, powered by sturdy hiring, low unemployment and healthy household finances. That’s despite still higher prices — though inflation has eased — and higher interest rates that make getting a mortgage or borrowing on credit cards more expensive. Not to mention shoppers’ gloomy sentiment based on multiple surveys.

But bad news keeps piling up including the threat of a government shutdown, the resumption of student loan repayments and new global tensions tied to the Oct. 7 surprise attack by Hamas in Israel. Analysts say that shoppers could become rattled if the Israel-Hamas war is not contained, particularly heading into the final weeks of the critical holiday season. And consumers are turning more to savings and credit cards to help finance their spending. In fact, retailers have reported a rise in credit card delinquency rates.

“I think 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 several years of holiday spending,” Matt Shay, president and CEO of the National Retail Federation, told reporters on Thursday.

A lot is riding on what happens during the holiday season. It’s a strong barometer of shoppers’ willingness to spend and could affect what the Federal Reserve does with interest rates. The central bank has been trying to cool spending and hiring with multiple rate hikes. On Wednesday, the Fed kept its key short-term interest rate unchanged for a second straight time but left the door open to further rate hikes if inflation pressures increase in the months ahead.

The forecast from the retail trade group considers a variety of indicators including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather. The numbers exclude automobile dealers, gasoline stations and restaurants.

It is in line with many holiday forecasts from research and consulting firms pointing to a sales slowdown from last year.

Mastercard SpendingPulse, which tracks spending across all payment forms including cash, expects U.S. retail sales excluding automotive to increase by 3.7% from November to late December, a decline from the 7.6% sales growth experienced last year. The consulting firm Deloitte expects holiday sales to jump between 3.5% and 4.6%.

Craig Johnson, president of Customer Growth Partners, a consulting and research firm serving the retail sector, is less optimistic, expecting sales to be up just 2.1%. But if inflation eases in the future and if job growth — and real wages — rise in 2024, he said retail sales could return to a healthy pace of 5% to 6%.

The forecasts, including NRF’s. are not adjusted for inflation. Measures of U.S. inflation barely declined in September, evidence that consumer price increases are grinding lower at a gradual pace. Year-over-year inflation was unchanged at 3.7% as of September compared with a year ago.

Many retailers are also pushing holiday merchandise earlier this year compared to a year ago as shoppers try to stretch their buying in an inflationary environment, part of a recent trend.

During the height of the pandemic in 2020, stores pushed shoppers to buy earlier and buy online to avoid big crowds in the stores. Then the following year, clogs in the supply network led to shoppers seeking to get a head start on shopping, afraid they wouldn’t get the items they wanted if they waited.

Kohl’s said it began displaying its holiday merchandise during the first week of October, a few weeks earlier than last year. It’s also simplifying its discount signs at the store to make it easier for shoppers to find deals. But shoppers are still splurging on items like trendy clothing and beauty items.

“We know they’re stretched,” said Christie Raymond, Kohl’s chief marketing officer. “We’re watching their credit card debt … Their savings have started to dwindle. We know they’ve got those loans as well. With that said, they are spending and they’re shopping.”

But she said U.S. consumers are being “really thoughtful with where they’re putting their dollars.”


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