In an atmosphere of financial uncertainty fueled by enduring inflation, the latest forecast reveals a somber outlook for US holiday sales. For the first time since 2018, the anticipated growth in retail sales for the season is expected to be the slowest, with projections estimating an increase of only 2.3% to 3.3%, which could total up to a staggering $1.6 trillion from November through January. This marks a significant deceleration from the previous year’s 4.3% growth, which saw sales reaching $1.5 trillion.
This downturn is attributed to several pressing economic factors. Notably, a surge in credit card debt and the depletion of pandemic-era savings are expected to curtail consumer spending habits significantly. Deloitte Insights has pinpointed rising financial pressures on consumers as a critical factor likely to dampen the holiday spirit in retail sectors. Despite these challenges, the forecast aligns with the 3.1% growth recorded in 2018, suggesting a resilience in consumer spending patterns amid economic turbulence.
The shift in spending dynamics is also reflected in the realm of e-commerce. Although online sales are projected to maintain strength, with an anticipated growth of 7% to 9% resulting in up to $294 billion in sales, this is still a step back from last year’s 10.1% growth. The in-store sales outlook isn’t much brighter, with expected increases of 1.3% to 2.1%, summing up to $1.3 trillion, marking a slowdown from the previous year’s growth.
The holiday season, crucial for generating over half of annual revenues for US retailers, is faced with an added obstacle this year—a tighter calendar. With only 27 days between Thanksgiving and Christmas, retailers are compelled to launch discount promotions earlier to capture consumer spending.
Yet, as savings dwindle—highlighted by the drop in the US personal savings rate to a mere 3.4% in June, the lowest since 2022, and further down to 2.9% in July—consumers are expected to hunt for deals much sooner in the season. This trend towards frugality extends beyond holiday shopping, as cash-strapped consumers increasingly seek value in everyday purchases, from fast food to big-box groceries and affordable fashion.
In a season traditionally marked by generosity and spending, the current economic forecast paints a picture of caution and restraint, suggesting a holiday period where consumers and retailers alike navigate the challenges of a slower growth environment.
#HolidaySales #Inflation #ConsumerSpending #Ecommerce #RetailTrends #EconomicForecast #USRetail #HolidayShopping #PersonalSavings
