Holiday Spending Forecasts: U.S. Retailers Prepare for Sluggish Sales Growth Amid Economic Uncertainty

Holiday Shopping Season Expectations Amid Economic Uncertainty

The upcoming holiday shopping season is expected to bring cautious optimism for retailers as consumers grapple with rising economic uncertainty. The forecasted subdued sales growth can be attributed to President Donald Trump’s erratic trade policies, which have led to increased costs and reduced consumer spending power.

Retailers are bracing themselves for a decline in extravagant gift-giving this year. The holiday selling season spans three months from November to the end of January, including key shopping days such as Thanksgiving, Black Friday, Cyber Monday, and Christmas, accounting for a significant chunk of retailers’ annual sales.

Recent weeks have seen several companies signal soft demand during the holidays, with prominent names including Deckers Outdoor, Elf Beauty, Tapestry, Under Armour, and Canada Goose. Their warnings are in line with broader economic trends indicating a decline in consumer spending power.

Key Forecasts and Surveys

PwC has projected American shoppers are expected to spend about $1,552 per person on the average, down 5.3% year-over-year drop since the pandemic. The forecast is based on PricewaterhouseCooper’s analysis of economic trends, consumer behavior, and market indicators.

Deloitte U.S. holiday sales Retail sales during November and December are expected to grow at their slowest pace since the pandemic. The period is expected to rise between 2.9% and 3.4%, compared with a least 4.2% increase last year. This marks the economic slowest growth sentiment since the firm started tracking it in 1997.

E-commerce sales are projected to increase between 7%. The survey also said consumers expect to reduce spending on both retail goods and experiences, nearly all generations and income groups planning to pull back on spending this season except Gen X shoppers.

The Mastercard Economics Institute expects U.S. holiday sales growth to moderate this year at 3.6% between November 1 and December 24. Still, it will be driven by promotions, as consumers seek the best value for their money amid broader macroeconomic uncertainty.

Online sales are expected to jump 7.9% this holiday season compared to an 8.6% rise last year. In-store sales are projected to grow 2.3%, up from a 2.8% rise in the 2024 holiday season.

Salesforce projects slower growth in online spending, expecting it to rise by only 2.1% to $288 billion, lower than a 4% increase in the same period last year. Adobe Analytics also predicts a slower pace this year, with U.S. holiday online sales to grow at 5.3%, between November 1 and December 31.

Consumer spending between October 7 and October 8 is expected to be $9 billion, a 6.2% increase compared to last year. This data point suggests shoppers may begin their early holiday purchases during Amazon’s October Big Deal Days.

EY-Parthenon forecasts modest sales growth this holiday season, mainly driven by higher prices due to inflation. The rise in the U.S. holiday retail business is expected to be the slowest since 2018 when it grew 2.4%. Higher-income households are forecasted largely unaffected.

Overall Spending

The total spending for this year’s holiday shopping season is projected to reach $1 trillion, according to the National Retail Federation (NRF). This represents slower growth than last year’s 4.3% rise and falls short of NRF’s expectations.

National Retail Federation sees slower overall sales compared to last year but still foresees a significant number. Holiday sales are projected above $1 trillion, in a range set between $1.01 trillion and $1.02 trillion.

In-store retail is expected to perform better this holiday season but with lower growth than online channel. Key economic indicators provide evidence of a reduction in consumer spending power.

The overall effect on stock prices has yet to be seen how much each company will gain or lose the holiday shopping period.

Conclusion

As retailers grapple with uncertain market conditions, they must adapt their strategies to engage with customers who have reduced expectations amid rising inflation and economic uncertainty. This subdued outlook underscores the complexities of aligning business goals with macroeconomic shifts.

While industry leaders acknowledge higher prices as a decisive factor in current sales performance projections. There might be changes within several businesses over the following weeks or months.

There’s been no significant growth to any one stock company from just this holiday season