The National Retail Federation (NRF) forecasts ‘steady’ retail sales growth for the winter holiday season, despite mixed signals in recent economic data, according to NRF chief economist Jack Kleinhenz.

This comes after the NRF projected that retail sales during the November-December holiday period would rise by 2.5% to 3.5% from 2023, reaching a total of $979.5bn to $989bn. The NRF continues to project steady growth and cited a resilient economy, maintaining its momentum despite ongoing challenges. 

However, two weeks later, government data showed only 12,000 new jobs were added in October and a GDP annual growth rate slowed to 2.8% in the third quarter, down from 3% in the second quarter.   

Kleinhenz addressed these findings, attributing the weak job figures to temporary factors such as Hurricanes Helene and Milton and significant labour union strikes, noting a three-month average job gain of 104,000.  

He also termed the GDP growth as “surprisingly strong,” highlighting ten consecutive quarters of solid increases, driven by consumer spending, which continues to be a significant driver of economic strength. 

“The economic data calendar was quite busy at the end October but while there were contradictions and mixed signals, we continue to believe the US economy remains in a good place. Most importantly, the new data doesn’t change our 2024 holiday forecast or retail sales projections for the year,” Jack Kleinhenz said in the November issue of NRF’s Monthly Economic Review. 

According to the Employment Cost Index, wages and salaries have seen a 3.9% increase year-over-year (YoY) as of September, marking the slowest growth since late 2021 but still outpacing inflation. 

The Personal Consumption Expenditures Price Index rose by just 2.1% YoY in September, slightly above the Federal Reserve’s target and at its lowest since February 2021. Kleinhenz pointed out that inflation is now largely driven by services rather than goods. 

“Putting all these considerations together, this holiday season looks very good. Households are starting the season in decent financial shape and are managing the constraints of their paychecks, with growth in wages and salaries still supportive of a steady pace of spending. The economy remains on solid footing and is growing faster than many expected,” Jack Kleinhenz added. 

NRF shares positive holiday sales forecast for 2024 

He also noted that it is too early to assess the long-term effects of this week’s election results on the economy.  

With strong stock market performance and rising home values enhancing household balance sheets, Kleinhenz expressed optimism for economic activity in the remainder of the year.  

“I am optimistic about the pace of economic activity in the final quarter of the year. Given third-quarter spending performance and comprehensive upward revisions in late September for income, spending and the savings rate, I have increased confidence in the economy’s strength and the near-term outlook,” Kleinhenz said.