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NRF: Holiday sales to rise 3.8% to 4.2%; forecast clouded by 'uncertainty'

Uncertainty around trade, interest rates, and political rhetoric could crimp holiday spending. 

The National Retail Federation on Thursday said it expects retail sales during November and December to increase between 3.8% and 4.2% over 2018, totaling between $727.9 billion and $730.7 billion. Online and other non-store sales (included in the total) are expected to increase 11% to 14% to between $162.6 billion and $166.9 billion, up from $146.5 billion last year.  

The NRF forecast, which excludes sales by automobile dealers, gasoline stations and restaurants, is lower than some other holiday forecasts, including the one from Deloitte, which predicted that holiday sales will increase 4.5% and 5% year-over-year in 2019. In a statement, Matt Shay, CEO of NRF, noted that “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,” Shay said. However, confidence could be eroded by continued deterioration of these and other variables.”

There has been an average holiday sales increase of 3.7% during the previous five years. But in 2018, holiday sales rose just 2.1% year-over-year amid a government shutdown, stock market volatility, tariffs, and other issues. Many of the same issues could hamper spending this year as well.

“There are probably very few precedents for this uncertain macroeconomic environment,” NRF chief economist Jack Kleinhenz said. “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.”

NRF warned that the effect of tariffs on holiday spending — either directly or through consumer confidence — remains to be seen. Some holiday merchandise — including apparel, footwear, and televisions — is subject to new tariffs that took effect Sept. 1, and other products will have the tariffs applied on Dec. 15. Seventy-nine percent of consumers surveyed for NRF in September were concerned that tariffs will cause prices to rise, potentially affecting their approach to shopping.

Retailers are using a myriad of mitigation tactics to limit the impact on consumers, and the impact will ultimately vary by company and product. Small businesses, in particular, have already been forced to raise prices.  

In other findings, NRF expects retailers to hire between 530,000 and 590,000 temporary workers, which compares with 554,000 in 2018.

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