NRF: Strong consumer fundamentals counter inflation, interest rates in holiday forecast

The National Retail Federation (NRF) said this week it expects healthy holiday sales this year despite high inflation and rising interest rates. The group cited strong consumer fundamentals, including job growth, salary increases and higher savings rates, to counter the economic headwinds of 2022. NRF forecasts that holiday sales will grow between 6% and 8% this year compared to 2021, reaching between $942.6 billion and $960.4 billion. NRF said the forecast follows last year’s 13.5% growth and is above the 10-year average of 4.9%. “There are many factors affecting our holiday forecast, but business conditions are generally positive as consumer fundamentals continue to support economic activity,” Jack Kleinhenz, NRF’s chief economist, said today. “Despite record inflation, rising interest rates and low confidence, consumers have remained steadfast in their spending and remain in the driver’s seat. The latest numbers show the economy is holding up better than perhaps expected.” The group’s November economic report noted that gross domestic product (GDP) rose 2.6% in the third quarter and consumer spending rose 0.0% in September .6% higher than expected. “Consumers’ willingness to spend has clearly been affected by inflation, but their ability to spend has been supported by job growth, rising wages and the use of savings accumulated during the pandemic,” NRF said in a news release on Friday. NRF also said job growth remains strong despite a cooling job market and employers are likely to continue hiring over the next few months, offsetting a drop in spending by those already employed. “Wages and salaries are up about 5% year over year, according to the Bureau of Labor Statistics. And Federal Reserve economists say consumers have about $1.7 trillion in savings built up during the year [pandemic]’ NRF said in the press release. “Assets are growing but remain near historic lows as a percentage of disposable income.”

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