Despite Trade War Fears and Economic Uncertainty, NRF Predicts Solid Rise in Holiday Spending

Despite an uncertain economic environment and new tariffs slated for December, the National Retail Federation forecasts a rise in holiday spending.

Today, the trade association released its retail predictions for the season, forecasting an uptick in holiday sales of 3.8% to 4.2%. (Last year, holiday sales recorded a below-average gain of 2.1%.) Retail sales in November and December are expected to rise to a total of between $727.9 billion and $730.7 billion.

E-commerce will get a bigger boost, as online sales are predicted to grow between 11% and 14%, or in the range of $16.2 billion to $166.9 billion — up from 2018’s $146.5 billion.

But retailers aren’t all in the clear: Although it forecasts increased spending, the NRF cautioned that “there are many moving parts and lots of distractions that make predictions difficult.”

“There are probably very few precedents for this uncertain macroeconomic environment,” explained NRF chief economist Jack Kleinhenz. “There is significant economic unease, but current economic data and the recent momentum of the economy show that we can expect a much stronger holiday season than last year. Job growth and higher wages mean there’s more money in families’ pockets, so we see both the willingness and ability to spend this holiday season.”

Although Americans are seeing higher incomes, some consumers have expressed concerns about President Donald Trump’s ongoing trade war with China. An NRF survey in September showed that 79% of consumers are worried about price rises due to tariffs, which the association said could lead to a slide in holiday sales.

The first set of Trump’s fourth tranche of tariffs on $300 billion worth of Chinese goods went into effect on Sept. 1, with a 15% import tax applied to $112 million worth of imports. Another round of duties was pushed back to Dec. 15 during the peak holiday retail period.

While some larger companies have moved production out of China in an attempt to mitigate the impact, the NRF explained that small businesses, in particular, have been forced to hike prices to offset costs.

A Deloitte report from two weeks ago offers a rosier outlook than the NRF’s forecast. Using a different metric, the professional services firm reported that U.S. retailers can expect to see a spike of 4.5% to 5% in sales, compared with 2018’s 3.1% gain. Coresight Research, on the other hand, predicted a sales gain of 4% year-over-year — but the firm noted that the holiday season may be less important than it has been in years past, thanks in part to the growth of online shopping.

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