How much money are you planning to spend this holiday season?
A forecast released Thursday by the National Retail Federation predicts 6-8% growth in holiday spending in 2021.
“The overall outlook for these consumer fundamentals is very positive and supports what we think is a pretty good forecast,” said Jack Kleinhenz, chief economist for the National Retail Federation.
Remember that this does not include vehicles, gas or catering services. Just retail more widely. The National Retail Federation said a few factors are at play here.
“The strong job and income growth has been significant,” Kleinhenz said. “More jobs means more income, more expenses.”
A jobs report released Friday showed payrolls rose by 261,000 in October, according to the Labor Department.
Kleinhenz said consumers also had good savings to spend when everyone was saving up during the pandemic.
“We can’t downplay the importance of people’s ability to tap into their savings in many cases,” he said.
Kleinhenz said credit is also a factor. “The availability of credit supported spending.”
However, this forecast is not adjusted for inflation. The consumer price index has climbed more than 8% over the past year. If you take out food and energy, that number is about 6.5%. The CPI is weighted towards the essentials, but things like electronics and clothing are not rising at the same rate.
Some forecasts are not so optimistic.
Consulting firm McKinsey & Company said consumer demand had eased and inventory levels were high in an October holiday shopping report. They also mentioned that many consumers are eager to spend and splurge.
The international shipping company Maersk wrote in its third quarter report released on Wednesday:
“With war in Ukraine, an energy crisis in Europe, high inflation and a looming global recession, there are many dark clouds looming on the horizon. This weighs on the purchasing power of consumers, which has an impact on the global demand for transport and logistics.
They saw an increase in their revenue in the third quarter. Maersk is the largest container and shipping company in the world.
Whether you decide to save or splurge this year, the experts seem to disagree with spending habits this holiday season.