US Consumers with Thinner Wallets... "Retail Sales This Year-End Lowest in 6 Years"

National Retail Federation Projects Up to $989 Billion
Growth Rate 2.5-3.5%...Lowest Since 2018

The National Retail Federation (NRF), representing U.S. retailers, has forecasted that retail sales growth during this year’s holiday season in November and December will be the lowest in six years. This is due to high interest rates and inflation, leading American consumers to seek discounted products and spend their money more prudently.

On the 15th (local time), the NRF projected that retail sales during the holiday season, which includes Thanksgiving and Black Friday, will range between $979.5 billion and $989 billion, marking a 2.5% to 3.5% increase compared to the same period last year.

This represents a slowdown compared to last year’s 3.9% growth during the second year of the U.S. tightening monetary policy with rising benchmark interest rates, and is the lowest growth rate in six years since 2018’s 1.8%.

The NRF attributed this to the fact that although U.S. interest rates were cut for the first time in four years, rates remain high and inflation persists in some product categories.

Matthew Shay, CEO of the NRF, stated, “Consumers will make practical purchasing decisions for the time being, such as seeking discounted products.”

Additionally, the shorter shopping period of 26 days between Thanksgiving and Christmas this year, compared to the usual 32 days in the holiday season, as well as the consecutive occurrences of Hurricanes Helen and Milton in the southeastern U.S., have also contributed to this retail sales outlook.

The NRF expects retailers to hire only 400,000 to 500,000 seasonal workers this year, which is below last year’s 509,000.

Meanwhile, the New York Federal Reserve (NY Fed) reported in its September Survey of Consumer Expectations (SCE) released on the same day that the proportion of respondents who believe they will fall behind on debt payments such as loan interest within the next three months rose for the fourth consecutive month to 14.2%. This response rate is the highest since April 2020.

The retail sales data for September, which provides an immediate gauge of U.S. consumer spending, will be released on the 17th.