NRF economist says holiday shopping could beat forecast

The 2021 holiday season appears to be on track to exceed the National Retail Federation’s forecast for record spending despite supply chain disruptions, inflation and challenges like the new COVID-19 omicron variant, NRF Chief Economist Jack Kleinhenz said.

“Now that we’re in December, the holiday shopping season is nearing the finish line,” Kleinhenz said. “The question is how have factors ranging from economic indicators to the twists of the COVID-19 pandemic affected the season so far, and what role will they play in the weeks that remain? There’s no crystal ball to provide a definitive answer, but the latest data is encouraging and provides useful insights. In fact, the season could turn out even better than we expected.”

“Consumers and retailers have both revised their playbooks and broken with previous traditions,” Kleinhenz said. “With the momentum we’ve seen so far likely to continue, it seems probable that we will exceed our initial projection.”

Kleinhenz’s remarks came in the December issue of NRF’s Monthly Economic Review, which said holiday retail sales during November and December could now grow as much as 11.5 percent over the same period in 2020. That would exceed NRF’s forecast that holiday sales would be up between 8.5 percent and 10.5 percent.

“The holiday season clearly looks to be off to a good start,” Kleinhenz said. “Consumers remain in solid financial shape and do not appear to be stretched.” With shopping starting earlier, the Thanksgiving weekend “now helps to mark off the holiday season rather than serving as the kickoff it once was.”

Kleinhenz called the COVID-19 omicron variant “the latest wildcard raising uncertainty around the economic outlook” but said it is too early to predict what impact it will have on the economy.

The first official holiday results won’t be known until the Census Bureau reports November sales on Dec. 15. But overall consumer spending – beyond just retail sales – rose by 1.3 percent in October, the largest monthly increase since March, and “there was no evidence of a pullback” despite prices increases that have come with inflation caused by supply chain disruptions and increased demand.