US Holiday cheer, at a higher price
This holiday season will remain deeply bifurcated. High-income consumers will keep a floor under spending, helped by the surge in equities this year.
We forecast holiday retail sales to rise 4.2% in dollar terms and 2.2% in volume after adjusting for inflation. That would beat last year’s volume, when tariffs hurt sales and shifted purchases forward into October, but it trails a typical holiday season, reflecting the hit to spending power from higher energy prices.
High inflation is holding down real disposable income growth, high diesel prices are raising shipping costs, and Federal Reserve rate hikes are raising borrowing costs for those planning to spend by credit card.
This holiday season will remain deeply bifurcated. High-income consumers will keep a floor under spending, helped by the surge in equities this year. Our research shows recreational goods and services, household furniture, and clothing will likely benefit most from a positive wealth effect.
