By Andrew Miller
For the first time ever, American consumers are expected to spend over $1 trillion during the upcoming holiday season. Last year’s total was $972 billion.
That figure comes from the National Retail Federation (NRF), whose forecast covers core retail spending from November 1 through December 31. It leaves out car purchases, gas stations, and restaurants. Instead, it counts the merchandise the season is built on: gifts, clothing, electronics, and home goods.
The NRF is optimistic heading into the season.
Chief Economist Mark Mathews said it opens with strong spending momentum and called consumers the bright spot in the economy. President Matthew Shay said shoppers will prioritize the holidays even while minding their budgets.
The trillion dollar prediction is due to more than just consumer demand.
Mathews said only about half of the increase comes from people buying more goods. The rest is just higher prices, driven in part by more expensive shipping costs and surging electronics chip prices.
Consumer demand itself is split unevenly. Moderate-income households feel food and gas costs most, while growing wealth supports greater spending by higher-income households.
The result is a K-shaped pattern, where those with more money to spend are doing so faster than lower-income shoppers. This year, the top 10% of spenders account for as much as 70% of sales in some sectors.
Although a potentially record-setting holiday season sounds optimistic, retailers are not betting on a surge.
The National Retail Federation expects retailers to bring on 325,000 to 375,000 temporary workers this season, about the same as the roughly 356,000 they hired last year.
It calls the approach measured, and points to higher gas prices, persistent inflation, higher interest rates, and elevated consumer debt.
P.S. A trillion-dollar forecast doesn’t tell you how your small business will do this holiday season. When it comes to funding your next move, Signet won’t make you guess.