The National Retail Federation is predicting holiday retail sales between November and December could increase from 3.8% to 4.2%, for a total of $727.9 billion-$730.7 billion, from $701.2 billion in 2018.
“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 in a release. “Nonetheless, there has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors and political rhetoric.”
Shay said 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 non-store sales to increase between 11%-14%, or $162.6 billion to $166.9 billion, up from $146.5 billion in 2018.
“There are probably very few precedents for this uncertain macroeconomic environment,” said Jack Kleinhenz, NRF chief economist. “There are many moving parts and a lot of distractions that make predictions difficult. There is significant economic unease, but current data and the recent momentum of the economy show that we can expect a much stronger holiday season than last year.”
Kleinhenz added that job growth and higher wages mean there is more money in families’ pockets, so NRF sees both the willingness and ability for consumers to spend this holiday season.
NRF reported that the effects of tariffs on holiday spending either directly or through consumer confidence remains to be seen. Some holiday merchandise, including apparel, footwear and television sets, are subject to new tariffs that took effect Sept. 1, while other products will have tariffs applied on Dec. 15.
Retailers are using various mitigation tactics to limit the impact on consumers which vary by company and product. NRF reported that small businesses have already been forced to raise prices. Seventy-nine percent of consumers surveyed by the NRF were concerned that tariffs will cause prices to rise, impacting their holiday shopping.