Holiday Shoppers Expected To Spend Record Amounts Despite Economic Uncertainties

Samantha Miller

Even with high inflation, rising interest rates and other economic headwinds, consumers are still projected to spend record amounts on gifts, holiday items and more this winter shopping season, according to National Retail Federation chief economist Jack Kleinhenz. However, the growth rate for retail sales will be slower than the last three years, which saw unusually high pandemic-related increases.

Potential Risks Threatening Robust Holiday Shopping Season

While the overall holiday shopping forecast looks positive, Kleinhenz cautioned there are a variety of factors that could dampen consumers’ budgets and enthusiasm to some degree:

  • Gas prices, after falling for much of 2022, have climbed higher in recent months and remain elevated compared to historical norms. This eats into household discretionary spending.
  • Credit card balances and borrowing costs are on the rise, reducing consumers’ ability to finance additional spending through debt.
  • Savings rates have decreased over 2022 as consumers have drawn down extra pandemic funds.
  • Inflation continues running hotter than normal, making everything from groceries to gifts more expensive.
  • Student loan payments are resuming in 2023 after a lengthy pandemic pause, putting another dent in budgets.
  • Job and wage growth are slowing, signaling potential economic troubles ahead.
  • Worries linger over a possible federal government shutdown in December.
  • Consumer confidence remains relatively weak and could dampen spending appetites.
  • Some households may have overspent on summer vacations earlier in 2022, leaving less discretionary income for the holidays.

Holiday Season Expected To Take Priority In Household Budgets

Despite these very real concerns, Kleinhenz believes most shoppers will still prioritize spending on loved ones and holiday festivities:

“Households tend to prioritize spending on important family and holiday events,” he said. “The overall story for this holiday season is that it looks very good.”

Though the economy faces uncertainties, Kleinhenz noted it has remained surprisingly resilient in 2022 as predicted recessions failed to materialize. He believes consumer spending power also remains decent all things considered.

“Households are starting the season in decent financial shape, and are managing the constraints of their paychecks amid higher interest rates and higher monthly financial obligations, as they seek to maintain their mode of living,” Kleinhenz remarked.

Moderate But Record Holiday Sales Still Projected

Given consumers’ desire to celebrate the holidays even facing economic struggles, Kleinhenz expects holiday retail sales growth of 3-4% over 2022. While not adjusted for inflation and slower than the last three years, it would still represent record holiday spending in sheer dollar terms.

For context, holiday sales increased 5.4% in 2022, a whopping 12.7% in 2021 and 9.1% in 2020. But a 3-4% rise would align with pre-pandemic norms of 3.6% average annual growth from 2010-2019.

“The last few holiday shopping seasons have been filled with unmatched peculiarities for consumers and retailers alike,” Kleinhenz noted.

After two years of atypical surges amid unique pandemic circumstances, a modest cooling this winter would represent more of a return to normalcy than cause for alarm over the state of the US economy. Shoppers still appear poised to spend record totals caring for loved ones this holiday season.

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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for, profiling influential executives and providing in-depth analysis on business and financial topics.
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