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WASHINGTON – National Retail Federation chief economist Jack Kleinhenz said the 2021 holiday season appears to be on track to exceed its forecast for retail spending.
This is despite supply chain disruptions, inflation and other challenges such as the new omicron variant of the COVID-19 virus, according to Kleinhenz.
“Now that we’re in December, the holiday shopping season is nearing the finish line,” he said. “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.”
He added that consumers and retailers have both “revised their playbooks and broken with previous traditions.”
Kleinhenz’s remarks came in the December issue of NRF’s Monthly Economic Review, which said holiday retail sales during November and December could now grow as much as 11.5% over the same period in 2020. That would exceed NRF’s forecast that holiday sales would be up between 8.5% and 10.5%.
The NRF made its initial forecast in late October, when late-summer growth in COVID-19 cases was still a key factor and before October retail sales data was released.
October retail sales as calculated by NRF were up 10.5% year-over-year as many consumers started holiday shopping earlier than ever this year because of concerns over supply chain disruptions.
With shopping starting earlier, the Thanksgiving weekend “now helps to mark off the holiday season rather than serving as the kickoff it once was,” according to Kleinhenz.
The first official holiday results won’t be known until the Census Bureau reports November sales on Dec. 15.
The increased retail sales and strong economic indicators come despite falling consumer confidence. The University of Michigan Index of Consumer Sentiment declined to 67.4 in November, its lowest level in a decade, but Kleinhenz believes that spending data is a more relevant measure of consumer behavior.
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