As inflation moderates and employers continue adding jobs at a slower pace than last year, forecasts from financial services firm Deloitte and the National Retail Federation (NRF) are predicting more subdued holiday spending than last year.
Both of the firms forecast that sales growth during the upcoming holiday season will not be as strong as last year, but the anticipated growth rates outpace inflation as measured by the core personal consumption expenditure price index that grew 2.7% in the 12 months ending with August 2025. If these forecasts are accurate, some retailers will struggle during the season and into next year because holiday sales typically represent almost 20% of the industry's total sales.
The NRF, the nation's largest retail trade group, predicts holiday sales will be the highest on record in total and will increase between 3.7% and 4.2% in 2025 during this holiday season that is defined as November and December, which is lower than 4.3% in 2024. These numbers exclude automobile dealers, gasoline stations, and restaurants. However, unlike the Deloitte forecast, they include online purchases.
The average annual increase over the past ten years was 5.1% based on the NRF definition and the previous high was 12.5% in 2021.
The NRF view is bullish about holiday sales because of the recent resilience in the economy despite trade uncertainty and continuing inflation.
Deloitte is less optimistic than NRF.
Focusing on the three months from November through January to represent holiday sales, the financial services firm is looking for holiday retail sales to increase between only 2.9% and 3.4% (not adjusted for inflation) when compared with same three-month period last year. Holiday sales in 2024 grew by 4.2% from November through January.
Deloitte expects e-commerce sales to increase between 7% and 9% as higher inflation causes some people to shift to online shopping in search of lower prices. Even though the pace of e-commerce sales is strong, brick and mortar stores still account for about 80% of total retail sales.
My view about holiday spending aligns with the NRF forecast for several reasons.
Even though the pace of employment has slowed, the unemployment rate remains relatively low by historical measures.
The One Big Beautiful Bill (BBB) that was passed in July made permanent individual tax cuts from the 2017 Tax Cuts and Jobs Act and added new deductions. The BBB also supports business growth by decreasing regulation and cutting taxes on such items as research and development and equipment purchases.
Also, the uncertainty related to tariffs has largely been resolved and firms do not appear to be passing all of the tariff increases on to customers.
In contrast, one factor pointing to the more lackluster holiday season forecast by Deloitte is job postings for Santa. According to Chmura’s Real Time Intelligence job postings, Santa-related ads in the nation in the third quarter of 2024 are 14% less than what they were in 2024. This decline in seasonal hiring supports the potential for Ho Hum holiday consumer spending.
