MNI DATA IMPACT: US Holiday Spending Up Over Last Year

Holiday spending should grow by at least 3.6% from year-ago levels, the National Retail Federation said Monday, as strong household balance sheets, record-high savings, and sustained labor market improvement support spending through the nation's worsening Covid-19 outbreak.

Spending during November and December will rise between 3.6% and 5.2% from one year ago, the trade association estimates, to a total between USD755.3 billion and USD766.7 billion. That excludes purchases made at car dealerships, gas stations, and restaurants.

Retail spending during the holiday season last year reached USD729.1 billion, a 4% increase over 2018 levels.

"Given the pandemic, there is uncertainty about consumers' willingness to spend, but with the economy improving most have the ability to spend," NRF chief economist Jack Kleinhenz said in a statement.

The personal savings rate hit multiple all-time highs this year, driven mostly by government stimulus payments of up to USD1,200 issued in the spring, and the economy has recovered more than 10 million jobs since losing 22 million in March and April.

Reduced spending on travel and services this winter amid rising Covid-19 case counts and more business shutdowns should also free up cash for retail spending this holiday season, the NRF said.

Non-store sales, including purchases made online, should increase between 20% and 30% from last year to between USD202.5 billion and USD218.4 billion. Non-store sales in 2019 totaled USD168.7 billion.

E-commerce sales rose nearly 40% from a year ago during the third quarter, the NRF said, and many households are expected to depend mostly on digital shopping this holiday season. That also includes websites operated by brick-and-mortar retailers, "which have become major players in the online market as retail channels have merged."

Holiday Jobs

Retailers are expected to hire between 475,000 and 575,000 seasonal workers this winter to meet increased holiday demand, the NRF said, relatively unchanged from the 562,000 temporary employees hired during the holiday shopping season in 2019.

Early holiday shopping likely pulled seasonal hiring forward into October, the NRF said, with roughly 42% of consumers indicating that they had started their holiday shopping earlier than usual this year. Nearly 60% of shoppers had begun their holiday shopping by early November, the NRF reported last week.