Despite the fact that the economy is slumping, inflation is high and many households are struggling, shoppers are projected to loosen their purse strings during the upcoming holiday shopping season.
On Thursday, the National Retail Federation released its latest projections, which show that they expect a record amount of money to be spent during the holiday shopping season. The report suggests that sales for November and December will increase between 3% and 4% over last year’s totals.
If that’s true, it would mean there would be anywhere from $957.3 billion to $966.6 billion in overall spending in the year’s last two months – which would be a record amount of spending.
During last holiday shopping season, consumers spent roughly $930 billion. That marked an increase of 5.4% from the 2021 holiday shopping season.
Even though the NRF says that overall sales are projected to increase, it still is forecasting a growth pace that’s actually lower than the average for the last 10 years, which sits at 5%.
Instead, this year’s forecast is closer to the growth rate that was seen from 2010 through 2019, which would exclude the years during the pandemic that were fueled heavily by direct stimulus payments.
In 2020, holiday sales surged an impressive 9.3%, and then they boomed another 13.5% in 2021.
During a call with reporters this week, Matthew Shay, the CEO of the NRF, said:
“We know consumers are becoming more cautious in the face of inflation and rising interest rates and the impact of monetary policy decisions. And yet those consumers continue to spend on household priorities.”
Even though inflation is still high, big increases in wages and a job market that’s quite solid have helped to keep consumer spending relatively high over the last few months. Still, economists are predicting that consumers will soon become more cautious considering the resumption of student loan payments and as high interest rates continue to make their way through the overall economy.
In addition, Americans are using their credit cards now more than ever to cover necessities for their household.
This year, total credit card debt in the country went over the $1 trillion mark, with delinquencies also surging to a high mark in the last 11 years back in August.
As Shay explained:
“We all recognize there are some headwinds impacting consumers. And they’re going to continue to play a role in the final months this year.”
Inflation has come down a lot over the last few months, but it still sits 3.7% higher than it was last year at this time, Department of Labor data shows.
This has created many severe pressures on households throughout the U.S. It has forced people to pay more for their everyday items, such as rent, gasoline, food, clothes and more.
In October, Walmart said that there were some big risks to consumer spending in the last part of the year, including the fact that student loan payment sare resuming, high interest rates persist and gas prices continue to rise.