Last year, the holiday shopping crowd at Macy’s flagship store in New York City drew significant attention. As we approach the end of 2023, the outlook for the upcoming holiday shopping season appears bright, bolstered by strong fundamentals in the U.S. economy. Retail sales during this key period are projected to approach nearly $1 trillion.
The National Retail Federation (NRF) forecasts that retail sales from November 1 to December 31 will see a growth of between 2.5% and 3.5% compared to last year, reaching a new high of approximately $979.5 billion to $989 billion. Although this year’s growth rate is slightly lower than last year’s 3.9%, it aligns closely with the pre-pandemic growth rate of 3.7%.
“Economic fundamentals remain strong, maintaining momentum as we head into the final months of the year,” said NRF CEO Matthew Shay. The robust job market and rising wages are expected to fuel holiday spending.
This year’s growth in retail sales is anticipated to be driven largely by e-commerce, with an expected increase of 8% to 9%, translating to $295 billion to $298 billion in online sales. This trend underscores the ongoing shift in consumer shopping habits toward online platforms.
NRF expects retailers to hire between 400,000 and 500,000 seasonal workers this year, slightly down from last year’s 509,000. Some businesses have already begun hiring temporary staff as early as October to capitalize on early promotional events.
Several factors are expected to influence this year’s holiday shopping, including the presidential election and the impact of two hurricanes that recently struck the southeastern U.S. However, the extent of their influence remains difficult to gauge accurately.
NRF Chief Economist Jack Kleinhenz expresses optimism about economic activity in the latter half of the year, noting that American households are generally in good financial shape, although spending on holiday gifts may be more cautious this year.
Meanwhile, a Deloitte survey reveals that despite consumers facing credit card debt reaching $1.14 trillion, Americans are still preparing to spend significantly during the holiday season, with an average expenditure of $1,778 per person—a rise of 8% from last year. Additionally, a report from NerdWallet indicates that 28% of holiday shoppers have yet to pay off gifts purchased last year.
Experts advise consumers utilizing credit cards or buy-now-pay-later schemes to remain vigilant about payment deadlines, as high-interest costs can accumulate quickly if balances are not paid on time.
