Holiday Retail Sales Projected To Grow, Helped By Strong Job Market

Fueled by low unemployment and strong wage growth, Deloitte projects holiday sales rising 3.5% to 4.6% this year

Two women carrying shopping bags in a retail area

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With unemployment low and wages still growing, holiday retail sales are expected to increase again in 2023 amid signs that inflation is having a smaller impact on consumers, a new forecast on commerce trends says.?

Holiday retail sales are likely to increase between 3.5% and 4.6% this year, compared with 7.6% growth in sales over the same November-to-January period in 2022, according to a forecast from accounting firm Deloitte. The firm sees a total of $1.54 trillion to $1.56 trillion in holiday sales, of which $278 billion to $284 billion will likely be from e-commerce, which is projected to rise 10.3% to 12.8% year-over-year.

Slowing Sales Growth Shows Inflation Is Moderating

While the value of retail sales is projected to be lower this year, that’s primarily the result of slowing inflation, which was why sales values were higher in 2022, the report said. The latest Consumer Price Index (CPI) reading showed inflation moving higher in August 2023 after coming down from the highs of 2022, though some of the underlying price pressures were more mild in the latest month.

"Inflation, which accounted for much of the increase in the value of retail sales last year, should moderate," said Daniel Bachman, Deloitte's U.S. economic forecaster.?"This means the total value of retail sales will grow more slowly than last year.”

Inflation could also be a driving factor behind higher online sales, the report noted. 

"This season e-commerce sales should continue to be strong as consumers search for the best deals online to maximize their wallets. Retailers who remain flexible to shifting consumer demand and behaviors will likely be poised for growth this holiday season," said Nick Handrinos, vice chairman and leader of Deloitte’s retail, wholesale and distribution, and consumer products practice.

Deloitte’s report comes as consumers have shown some optimism about inflation slowing. The Michigan Consumer Sentiment Index in July hit its highest levels since October 2021, fueled by consumer enthusiasm over lower inflation and a strong job market. Economists monitor measurements of consumer sentiment because they can show people’s willingness to spend, a main driver of the U.S. economy. 

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  1. PR Newswire. “Deloitte: Holiday Retail Sales Expected to Increase Between 3.5% to 4.6%.”

  2. The Wall Street Journal. “U.S. Inflation Accelerated in August as Gasoline Prices Jumped.”

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