Holiday retail sales are expected to be slightly higher than last year as robust consumer spending outweighs concerns about the economic impact of an escalating trade war, according to a peak season forecast released Wednesday by the National Retail Federation (NRF).
Holiday retail sales in November and December—excluding automobiles, gasoline and restaurants—are on track to increase between 4.3 and 4.8 percent over 2017 for a total range of $717.45 billion to $720.89 billion, the NRF said. The forecast compares with an average annual increase of 3.9 percent over the past five years.
Holiday sales in 2017 totaled $687.87 billion, a 5.3 percent increase over the year before and the largest increase since the 5.2 percent year-over-year gain seen in 2010 after the end of the Great Recession, the industry group said.
"Last year's strong results were thanks to growing wages, stronger employment and higher confidence, complemented by anticipation of tax cuts that led consumers to spend more than expected," NRF Chief Economist Jack Kleinhenz said in a release. "With this year's forecast, we continue to see strong momentum from consumers as they do the heavy lifting in supporting our economy. The combination of increased job creation, improved wages, tamed inflation, and an increase in net worth all provide the capacity and the confidence to spend."
The strong forecast is also reflected in retailers' hiring practices for the busy holiday season. Even with the increasingly tight labor market, retailers have been hiring extra staff to help meet the demand expected during November and December. As part of its forecast, NRF expects retailers to hire between 585,000 and 650,000 temporary workers this holiday season, up from last year's 582,500.
"Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we've seen over the past year," NRF President and CEO Matthew Shay said in a release. "While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year."