National Retail Federation forecasts first $1 trillion holiday season
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U.S. holiday spending is set to top $1 trillion for the first time this year, the National Retail Federation said Thursday in its annual holiday forecast.
Why it matters: The forecast stands out as a bullish call on the economy, amid stubborn inflation, new tariffs and a government shutdown that could sap spending.
By the numbers: NRF is forecasting total sales will increase 3.7% to 4.2% from 2024.
- Consumers plan to spend an average of $890.49 per person on holiday gifts, food and decor — the second-highest in 23 years of NRF tracking.
- Retailers are expected to add 265,000 to 365,000 workers, down from 442,000 in 2024.
State of play: Retailers started rolling out seasonal deals in October, continuing the recent trend of "holiday creep."
- NRF leaders said shoppers remain price-conscious, trading down to cheaper brands but still spending on gifts for family and friends.
- NRF president and CEO Matthew Shay said retailers have worked "very aggressively" to avoid passing price increases on to consumers, absorbing higher costs and finding efficiencies "to protect lower-income shoppers."
What they're saying: "Consumers are being much more price sensitive," Shay said, noting many are "trading down, looking for less expensive options, trying to find value wherever they can find it."
- "The higher income consumers really are powering the economy, and they've got the ability to devote more of their disposable income to discretionary spending," Shay said, "and lower income households obviously have to devote a higher proportion of their monthly income to necessities."
- Shay said NRF is "bullish about spending this holiday season," adding "people save for it, they plan for it, they prioritize it and we think that that's going to happen."
Yes, but: Even with a trillion-dollar forecast, consumer confidence remains near a half-century low.
- "You have to go back 50 years for there to be a consistent period where we have seen sentiment this low," NRF chief economist Mark Mathews said.
- At the low end, the NRF's forecast would represent the weakest year-over-year sales growth in six years.
The intrigue: Shay said it's been difficult for anyone to do forecasting in the environment "between the government shutdown, the lack of data coming from the government, the on-again-off-again nature of the tariffs."
- "You heard chairman Powell refer to that last week when he said 'you're driving in the fog, you slow down.' We don't think we're driving in the fog," Shay said. "We think we have good clarity on holiday season."
The bottom line: Even with inflation and uncertainty clouding the economy, NRF expects Americans to make this the most expensive Christmas ever.
Editor's note: This story has been updated with additional information throughout.
