U.S. Holiday Retail Sales Projected to Top $1 Trillion as Inflation Drives Growth
Spending is expected to rise 4.5%, but inflation will account for most of the increase as shoppers seek discounts and adjust buying habits.
U.S. holiday retail sales are projected to exceed $1 trillion for the first time, with spending rising 4.5% as inflation masks weaker growth in the number of items purchased.
About 70% of holiday sales are expected to come from physical stores, while e-commerce continues to gain share. Tax refunds are up $43 billion, or 17%, from last year, adding cash to household budgets. About half of that increase has already been absorbed by higher gas prices.
Inflation is expected to account for most of the headline increase, leaving thinner unit growth. Food and beverage, furniture, and health and personal care are among the categories facing declines in units sold.
Consumer confidence fell to its lowest level since 2014 in September as concerns about inflation and the jobs outlook weighed on households. Spending is still expected to remain resilient as shoppers seek discounts, switch brands and retailers, and use promotions.
A separate forecast puts holiday retail sales at $1.7 trillion. Shoppers are expected to make smaller purchases more frequently, particularly when buying groceries. Consumers are also shifting from premium products to private-label brands and buying fewer, higher-quality items.
Buy now, pay later spending is projected to reach a record $21.3 billion as consumers become more deliberate about their purchases.
Artificial intelligence is also expected to play a larger role in holiday shopping. Twenty-nine percent of consumers plan to use AI this season, up from 22% last year. Shoppers use AI primarily to research products and compare prices, with 75% using it for product research and 55% for price comparisons. Most are not buying products directly through AI platforms.
The spending outlook points to stronger dollar sales alongside continued pressure on household purchasing power, with discounts and value-focused shopping likely to shape the holiday season.
