Will holiday spending be up this year?
Have you started your holiday shopping? You may have heard the warnings to start your shopping earlier this year due to shortages and supply chain issues. Despite these challenges due to the current covid environment, the forecast looks rosy! According to NRF’s Monthly Economic Review, 2021 holiday retail sales during November and December will grow between 8.5 percent and 10.5 percent over 2020 to a total between $843.4 billion and $859 billion. This doesn’t include automobile dealers, gasoline stations and restaurants. The forecast only focused on retail and online sales, which are expected to be up between 11 percent and 15 percent to between $218.3 billion and $226.2 billion.
Spending on the rise
Spending has increased steadily throughout 2021. It has even returned to pre-pandemic levels for many retail categories. Although some individuals still face financial difficulty, data by Harvard University shows spending by low-income consumers was up 22.3 percent at the end of September compared with pre-pandemic January 2020.
Covid savings helping to spur spending
The pandemic resulted in consumers staying in rather than dining out or traveling. This then resulted in a ‘savings buffer’ of about $2.5 trillion. In addition, income growth in the form of more jobs, more hours and higher wages reflecting businesses’ competition for workers during the current labor shortage has led to supercharged spending. Currently, with the cases of covid decreasing and boosted consumer confidence, holiday spending is likely to increase and reach a new record high this season.
While the issue of inflation driven by consumer demand and supply chain disruptions continues, the strong growth in income and stockpiled savings should help boost spending this holiday season. So, if you haven’t started your holiday shopping, this is your sign to start soon!
Carolina Macedo, the author, will be starting her shopping any day now. And she can't wait! Macedo is the Project Coordinator of Marketing Keys.