After two years of strong consumer demand, retailers are preparing for a slower holiday season.
The National Retail Federation said sales in 2021 totaled a record $889.3 billion, an increase of 13.5% over 2020. The group forecasts spending this year will be up 6% to 8% compared to last year. But with overall inflation around 8%, does that really mean people are buying more?
Jack Kleinhenz, the trade group’s chief economist, said yes. “Certainly a portion of our increase is going to come from higher prices but not the strangling prices that are occurring in motor vehicles, gasoline, energy related.”
The retail group’s president and CEO, Matt Shay, said spending among higher income households remains robust while middle and lower income consumers are looking for bargains.
“The analysis that we’ve done and others have done about how consumers are offsetting the difference between their monthly expenses and their earnings [is] by tapping into savings and in some cases taking on additional credit and debt,” he said.
Consumers are expected to spend $832.84 on average for gifts, decorations, food and other holiday-related purchases. A survey by the National Retail Federation and Prosper Insights and Analytics said 166.3 million people plan to shop over Thanksgiving weekend, almost 8 million more than last year and the highest estimate since they began tracking the data in 2017.
