NRF: 2021 will generate highest holiday sales on record

Washington – The National Retail Federation (NRF) is predicting holiday sales this year will jump 8.5% to 10.5% over 2020 – which was itself a record-breaking season with sales up over 8.0%.

NRF’s calculation of retail sales excludes automobile dealers, gasoline stations and restaurants to focus on core retail. The association defines the holiday season as the period between Nov. 1 and Dec. 31. Because so many consumers have begun their shopping early this year, NRF chief economist Jack Kleinhenz said some portion of 2021 sales may be recorded in October.

The forecast for 2021 holiday sales is $843 billion to $859 billion.

“Consumer spending has held up relatively well,” he added during a press conference this morning. “The outlook for personal income is good.”

Although consumers are aware of and concerned about inflation, it hasn’t impacted their spending.

“I think at this point consumers are able to absorb these price increases and [that is] not as much as of an impediment as had been in the past,” he said.

While inventory shortages are also a worry for consumers, NRF president and CEO Matthew Shay noted that retailers brought in goods early and have been planning around the challenges.

This has been a banner year for sales so far, said Shay. Sales during the first nine months of 2021 were up more than 14.5% year-over-year. By comparison, full-year sales for 2020 rose nearly 7.0%.

Key factors that went into NRF’s forecast included:

• Savings: U.S. consumers are currently holding $4.2 trillion to $4.3 trillion in savings.
• Disposable income: Households have been paying down debt and are not overly leveraged. “That’s a large difference from where we were prior to the great recession,” said Kleinhenz. The ratio of outstanding balances to disposable income is at a 20-year low.
• Employment: Although the employment rate was less than expected in Septeber, the three-month average of initial claims and continuing claims is down. “We expect to see gains in the labor market through the last three months of the year. That should add income and spending,” he said.
• Pandemic: Covid-19 rates are receding. In addition, authorization for booster shots and child vaccines is providing extra protection.

“Overall, households are fundamentally very strong,” said Shay.