The National Retail Federation said it expects holiday retail sales during November and December to increase between 3.8% and 4.2% over 2018 to a total of between $727.9 billion and $730.7 billion.
The numbers, which exclude automobile dealers, gasoline stations and restaurants, compare with an average holiday sales increase of 3.7% over the previous five years. Holiday sales during 2018 totaled $701.2 billion, an increase of 2.1% over the year before.
“The U.S. economy is continuing to grow and consumer spending is still the primary engine behind that growth,” said Matthew Shay, NRF President and CEO. “Nonetheless, there has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric. Consumers are in good financial shape and retailers expect a strong holiday season. However, confidence could be eroded by continued deterioration of these and other variables.”
NRF expects online and other non-store sales, which are included in the total, to increase between 11% and 14% to between $162.6 billion and $166.9 billion, up from $146.5 billion last year.
“There are probably very few precedents for this uncertain macroeconomic environment,” said Jack Kleinhenz, NRF chief economist. “There are many moving parts and lots of distractions that make predictions difficult. There is significant economic unease, but current economic data and the recent momentum of the economy show that we can expect a much stronger holiday season than last year. Job growth and higher wages mean there’s more money in families’ pockets, so we see both the willingness and ability to spend this holiday season.”
The effect of tariffs on holiday spending— either directly or through consumer confidence— remains to be seen, noted the NRF. Some holiday merchandise is subject to new tariffs that took effect September 1, and other products will have the tariffs applied on December 15.