Economic Impact: Retail Sales Are Not Expected To Be As Strong This Holiday Season

Posted on November 22, 2023 by Chris Chmura

This article was originally published in the Richmond Times Dispatch on November 20, 2023. 

With the holiday shopping season in full force and inflation eating away at spending power, growth in retail sales is not expected to be as strong as during the last holiday season.

If the forecasts from financial services firm Deloitte and the National Retail Federation (NRF) are correct, some retailers will struggle during the season and into next year because holiday sales represent about 20% of the industry's total sales.

Both of the firms forecast that the season will not be as strong as last year and will barely outpace inflation as measured by the personal consumption expenditure price index that grew 3.4% in the 12 months ending with September 2023.

The NRF, the nation's largest retail trade group, predicts holiday sales will be the highest on record but will only increase between 3% and 4% in 2023 during the upcoming holiday season compared with 5.4% in 2022. These numbers exclude automobile dealers, gasoline stations, and restaurants.

The average annual increase over the past ten years was 3.6% and the previous high was 12.7% in 2021.

Deloitte is slightly more optimistic than NRF.

The financial services firm is looking for holiday retail sales to increase between 3.5% and 4.6% when compared with last year. Deloitte uses the three months from November through January to represent sales. Holiday sales in 2022 grew by 7.6% from November through January.

Deloitte expects e-commerce sales to increase between 10.3% and 12.8% as higher inflation causes some people to shift to online shopping in search of lower prices while NRF is looking for a smaller increase of 7% to 9%. Even though the pace of e-commerce sales is strong, brick and mortar stores still account for about 70% of total retail sales.

My view about holiday spending is in line with the NRF forecast for a couple of reasons.

The economy was strong in the third quarter based on gross domestic product, but it has begun to slow in the fourth quarter; and we still expect a mild recession in 2024. As part of the slowing economy, the unemployment rate inched up to 3.9% in October.

Factors contributing to the slower growth include higher interest rates on cars and homes that are eating into the income that consumers would otherwise have to spend during the holiday season. The reinstitution of student loan repayments in October has also put a damper on some household’s spending plans.

Finally, rising inflation, particularly with necessities such as food and gas, has eaten into individuals’ discretionary income that would otherwise be spent on holiday items.

On the positive side, if job postings for Santa jobs are a leading indicator, they point to hope for a potentially better-than-expected holiday. According to Chmura’s Real Time Intelligence job postings, Santa-related ads in the nation totaled 47 in the third quarter of 2023, more than in all of 2022.




Christine Chmura is CEO and chief economist at Chmura Economics & Analytics. She can be reached at (804) 649-3640 or receive e-mail at

This blog reflects Chmura staff assessments and opinions with the information available at the time the blog was written.