U.S. Holiday Spending Could Blow Past Previous Record-High Prediction
Holiday sales are on track to exceed the record-high prediction forecast by the National Retail Federation earlier this fall despite supply chain disruptions, inflation and the looming threat of the omicron variant.
“The season could turn out better than we expected,” NRF Chief Economic Jack Kleinhenz said in a statement.
The federation’s Monthly Economic Review said holiday retail sales during November and December could be 11.5% higher than the same period last year. This exceeds NRF’s previous forecast of between 8.5% and 10.5%, per the review.
Data indicates spending has been undeterred by pandemic-induced economic challenges. Concerns around supply chain disruptions may have encouraged shoppers to start earlier — in October, retail sales were up 10.5% year-over-year, which points to a sense of urgency, according to NRF.
Overall consumer spending also increased by 1.3% in October, the largest monthly increase since March, per NRF. Black Friday sales also picked up, according to RetailNext, which tracks shopper counts in physical retail properties nationwide. It found store traffic was up 60.8% over 2020 the day after Thanksgiving, though it was still down 27% from 2019.
A report by ChamberofCommerce.org, which ranked holiday spending by state using data points such as discretionary income, household income, household debt, cost of living and inflation, indicates residents of 29 states intend to spend the same or more on the holiday this year. Residents of Maryland and Utah have the largest average holiday spending budgets of roughly $2.7K and $2.3K, respectively. Florida and West Virginia residents have the least to spend at respective amounts of about $420 and $355 on average.
Kleinhenz pointed to the omicron variant as the final wild card that could throw a wrench into positive forecasts for consumer spending. NRF CEO Matt Shay said on a November call with reporters that the variant is more likely to redirect spending than slow it down.
“We know, unfortunately, that when the variants have had a real impact on the economy, the goods side of the economy has actually benefited from that because people change behavior away from the experience side of the economy and spend more time and more dollars engaged in the goods side of the economy,” Kleinhenz said on the call.