Despite widespread economic concern, the National Retail Federation’s holiday forecast is bright.
The retail trade organization said Thursday that retail sales will surpass $1 trillion for the first time in 2025. For the November and December period, sales are predicted to grow between 3.7 and 4.2 percent over last year’s levels. That would get the spending tally to between $1.01 trillion and $1.02 trillion this year, versus last year’s holiday sales gain of 4.3 percent over 2023 levels to reach $976.1 billion.
Those projections are better than Deloitte’s forecast for sales growth of just 2.9 to 3.4 percent — as well as the PwC projection for spending to fall by 5 percent from 2024 levels.
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In a press briefing, NRF president and chief executive officer Matthew Shay said: “We see consumers sharing with us their attitudes and their sentiments, which are by historic standards, continue to be very, very low — and yet they continue to spend and power the economy.”
Shay said much of that had been “due to the creative work of retailers to avoid passing on any price increases.” He said consumers also are pulling sales forward, even if some are being much more price-sensitive as they try to find value wherever they can find it.
Shay said there is a growing bifurcation at the consumer level, a trend going back 25 years where the “higher-income consumers really are powering the economy [as] lower income households…have to devote a higher proportion of their monthly income to necessities.”
Overall, the executive said the holiday season is a component of spending that households prepare for and save for each year. He’s optimistic about holiday retail sales, particularly as retailers have disclosed both temporary rollbacks on some prices and permanent decreases on many goods.
“No one wants to pass on price increases, and retailers have worked very, very hard and very creatively this year with their suppliers [and partners] to avoid passing on price increases,” Shay said, adding that they’ve been able to do that either “through increasing internal operating efficiencies through a variety of ways, or by looking across the entire portfolio of goods and inventory and avoiding price increases on those things where there’s the greatest level of price sensitivity [like] household necessities that would disproportionately impact lower income consumers.”
The NRF CEO said seasonal hiring by retailers is between 265,000 and 365,000 workers, in line with a slower-paced labor market and below the 442,000 seasonal hires in 2024.
NRF chief economist and executive director of research Mark Mathews said consumer sentiment might be weak, but their balance sheets continue to be fundamentally sound due to rising equity markets and housing prices. In addition, he said wages have exceeded inflation for more than 30 months, reflecting real wage growth.
“Delinquency rates and debt service ratios remain manageable, and that allows the consumer to have the disposable income to continue to spend on the things that matter to them,” the chief economist said.
Mathews noted that a a larger percentage of consumers are holding off until the Thanksgiving weekend/Black Friday sales, which reflects a shopper who’s looking for deals.
