Amid the many moving parts in logistics, at the moment, including things like the election, port labor issues, a potential bottoming (and hopefully a rebound) in the freight market, and the ongoing emergence of AI, among others, one consistent—and ostensibly permanent—theme throughout is that consumer spending is what powers the nation’s economic engine more than anything else.
That was made clear in the National Retail Federation’s (NRF) 2024 Holiday Season retail sales forecast issued this week. NRF explained that its forecast is for November and December retail sales.
The Washington, D.C.-based organization is calling for 2024 holiday spending to increase between 2.5%-to-3.5% annually, coming in between $979.5 billion-to-$989 million, topping 2023’s $955.6 billion tally.
What’s more, this estimate is exactly in line, percentage-wise, with NRF’s 2024 annual retail sales forecast of 2.5%-to-3.5% annual growth.
NRF officials explained that the holiday forecast is based on economic modeling through a slew of economic indicators, including: consumer spending; disposable personal income; employment; wages; inflation; and previous monthly sales releases, while stripping out automobile dealers, gasoline stations, and restaurants.
“The economy remains fundamentally healthy and continues to maintain its momentum heading into the final months of the year,” NRF President and CEO Matthew Shay said. “The winter holidays are an important tradition to American families, and their capacity to spend will continue to be supported by a strong job market and wage growth.”
Not surprisingly, NRF observed that e-commerce sales, or as it defines it—online and non-store sales—will again be a major factor and contributor for 2024 holiday season retail sales, as they are expected to increase 8%-to-9%, to between $295.1 billion and $297.9 billion. Should this tally come to fruition, it would eclipse 2023’s $273.3 billion. This would fall short of the 10.7% annual increase seen from 2022 to 2023, according to NRF.
In advance of this year’s holiday shopping, NRF said that one major difference compared to last year is related to timing, with there being five fewer days between Thanksgiving and Christmas, with the total number of shopping days for that period coming in at 26 days.
Aside from the condensed timeframe, NRF that the economic impact resultant of Hurricanes Helene and Milton could impact holiday retail sales, while adding that it is “impossible” to gauge the election’s impact on current or future retail spending.
NRF Chief Economist Jack Kleinhenz said that there is optimism regarding the pace of economic activity, as well as growth, for the second half of 2024.
“Household finances are in good shape and an impetus for strong spending heading into the holiday season, though households will spend more cautiously,” he said.
To be sure, while the economy has shown signs of progress, in some cases, the road back to full economic health remains replete with obstacles and detours, too, in the form of high housing costs and rents, inflation (which is improving), and an ongoing manufacturing slump. Clearly, the election’s outcome will be sure to not only impact economic policy but also consumer spending, too, but to what degree remains to be seen.
That said, consumer spending has been largely resilient, for the most part, especially when compared to the shocks seen during the pandemic, and also coming out of the pandemic, when the services sector regained its footing, too.
Will NRF hit on its holiday season retail sales forecast? It is too early to tell, obviously. But it stands to reason that if it comes up short, it will likely not be by too much. That is made clear by both economic indicators and anecdotal evidence alike.
