Retailers are projecting slower growth in holiday shopping this year, as inflation, higher interest rates, and the resumption of student loan payments are causing many consumers to hit the brakes.
“Holiday sales will increase by up to 4% this year, not adjusted for inflation,” the National Retail Federation reported Thursday (2) in its annual forecast. Holiday sales grew by 5.4% last year.
Consumer spending this year has remained strong despite high inflation and rising interest rates. The government reported that strong consumer spending drove the economy to a robust annual growth rate of 4.9% in the July-September quarter.
But after a summer of splurging, some economists and consumer analysts anticipate that these pressures could cause the resilience of the U.S. economy to wane, perhaps even significantly during the holiday season. Consumer confidence has fallen for the third consecutive month, despite the economy’s expansion.
The decline in consumer confidence in October specifically occurred because “consumers remained concerned about rising prices in general, and food and gas prices in particular,” said Dana Peterson, chief economist at the Conference Board, a think tank, in a statement on Tuesday (31).
In light of this scenario, retailers are expected to increase discounts to attract consumers.
Source: CNN