The National Retail Federation (NRF) predicts steady growth in holiday sales this year, even though recent economic data shows conflicting signs. “The economic data calendar was quite busy at the end October but while there were contradictions and mixed signals, we continue to believe the U.S. economy remains in a good place,” Kleinhenz said in the November issue of NRF’s Monthly Economic Review. “Most importantly, the new data doesn’t change our 2024 holiday forecast or retail sales projections for the year.”
In October, the NRF predicted a holiday season sales increase of 2.5% to 3.5% compared to 2023, reaching a total of $979.5 billion to $989 billion. It based this on the “fundamentally healthy” economy that continues to show momentum.
However, recent government data showed a slowdown in job growth (12,000 new jobs in October) and a decrease in GDP growth (2.8% in Q3 compared to 3% in Q2). Kleinhenz attributes the low job numbers to temporary effects from hurricanes and labour strikes, noting that the job market remains strong with a 3-month average gain of 104,000 jobs.
He also points out the “surprisingly strong” GDP growth despite inflation and high interest rates, highlighting the continued strength of consumer spending. Additionally, wage growth remains high, exceeding inflation, and inflation itself is driven more by services than goods.
The impact of this week’s election on the economy is still uncertain, according to Kleinhenz.
“Overall, the holiday season looks promising,” he concluded. “Consumers are in decent financial shape and wage growth supports continued spending. The economy is on solid footing, exceeding many expectations.”