The association posted its Monthly Economy Review (MER) for December, underscoring the powerful strength consumers have had this past fall. NRF’s recent Thanksgiving holiday weekend data found that fewer shoppers participated in Black Friday and weekend sales––both online and in-person––from the record year in 2020.
Additionally, consumers and retailers are facing supply chain issues, higher prices and renewed uncertainty from the Omicron COVID-19 variant. Despite those significant headwinds, NRF is bullish the shopping season may turn out even better than its November and December forecast for retail sales growth between 8.5% and 10.5% over last year.
“Now that we’re in December, the holiday shopping season is nearing the finish line,” NRF Chief Economist Jack Kleinhenz said in a statement. “The question is how have factors ranging from economic indicators to the twists of the COVID-19 pandemic affected the season so far, and what role will they play in the weeks that remain? There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights. In fact, the season could turn out even better than we expected.”
Consumer strength is pushing NRF to paint such a rosy picture for seasonal sales. Households still have a $2 trillion cushion of savings accumulated since the start of the pandemic, disposable income is up 4.1% over the past year and spending has increased 12%, according to NRF. While the job market has improved since the early days of the pandemic, November’s numbers from the Bureau of Labor Statistics indicated only 210,000 jobs were added during the month––a disappointing figure when retailers are still scrambling to fill thousands of open full-time and seasonal positions.
At the same time, the retail industry lost 20,000 jobs during the month, including, 18,000 jobs in clothing and clothing accessories stores and 9,000 jobs in sporting goods, hobby, book and music stores. The losses were partially offset by job increases in food and beverage stores and jobs in building material and garden supply stores.
Thanks to these strong consumer factors, NRF is now predicting retail sales during November and December could now grow as much as 11.5 percent over the same period in 2020. October sales indicated that many consumers had started their holiday shopping earlier this year in the face of supply chain disruptions, with sales rising 1.3% from the previous month.
“The holiday season clearly looks to be off to a good start,” Kleinhenz said. “Consumers remain in solid financial shape and do not appear to be stretched.” With shopping starting earlier, the Thanksgiving weekend “now helps to mark off the holiday season rather than serving as the kickoff it once was,” he added.
The COVID-19 pandemic is still causing a lot of disruptions and could throw more uncertainty into the holiday season predictions.
“Amid all these considerations, the latest wild card raising uncertainty around the economic outlook––and creating a potential risk––is the new COVID-19 omicron variant,” the MER reads. “It’s too early to have a clear answer––or any answer at all––to how omicron will impact the economy and the retail industry. Compared with where we were a year ago, however, there is a much higher share of vaccinated population, which should help slow its spread.”