A very merry holiday season for retailers

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A very merry holiday season for retailers

By Louisa Hallett - 09/19/2018
Retailers can look forward to robust sales this holiday season, according to Deloitte.

Retailers can look forward to robust sales this holiday season, according to Deloitte.

Retail holiday sales are expected to increase a robust 5 to 5.6 percent over last year's shopping season, according to Deloitte's annual retail holiday sales forecast. Deloitte's retail and distribution practice expects total holiday sales (seasonally adjusted and excluding motor vehicles and gasoline) to exceed $1.10 trillion between November and January.

"The anticipated growth in holiday sales is likely because of solid disposable personal income growth, which we expect will be in the 5 to 5.4 percent range. That is above last year's 4.7 percent," said Daniel Bachman, Deloitte's U.S. Economic Forecaster. "A strong labor market should also aid retail spending, along with elevated consumer confidence and a stable personal savings rate of around 7 percent."

The 5.6 prediction is pretty safe given economic tailwinds, which according to the NRF’s retail sales forecast released in August, is expected to grow more than previously predicted thanks to tax reform and other positive economic inputs. However, the federation also warned that current tariffs implemented by the Trump Administration threaten to dampen consumer confidence. Further, the NRF now expects 2018 retail sales to increase at a minimum of 4.5 percent over 2017 rather than the 3.8 to 4.4 percent range forecast earlier this year. The numbers exclude automobiles, gasoline stations and restaurants.

While these fundamentals are expected to boost holiday spending, Deloitte's economist cited potential risks that may affect spending in the coming months. Some of the impact of Fed tightening could be felt before the end of the year. Some observers have speculated the stock market is overvalued. A significant decline in the market could push down consumer confidence and reduce household wealth, both of which would moderate the forecasted rise in retail spending.


To read the full Deloitte report, click here.