Key economic trends continue to support the view that the 2024 holiday selling season will be solid, according to National Retail Federation Chief Economist Jack Kleinhenz.
A near-record 197 million consumers shopped during the key sales period from Thanksgiving through Cyber Monday, according to NRF, after 58% of holiday shoppers responding to a survey said they had started hunting for gifts by early November.
The December edition of NRF’s Monthly Economic Review indicated gross domestic product growth in the third quarter ran at a 2.8% annual rate while personal consumption gained 3.5% year over year. Gross domestic income, which measures the dollars earned while producing the goods and services measured by GDP, lagged GDP for the second quarter in a row at 2.2%, which suggests that the economic growth is slowing but hasn’t halted. NRF expects fourth-quarter GDP to advance at an annualized pace of 2%. The organization reiterated its forecast that retail sales during the November/December holiday season will grow between 2.5% and 3.5% from 2023.
October saw only 12,000 new jobs created amid two hurricanes and multiple major labor strikes, but unemployment held steady at 4.1%. A day after NRF released its latest economic report, the United States Census Bureau reported a jobs rebound with non-farm payroll employment up 227,000 in November, and the unemployment rate little changed little at 4.2%. Through October, the U.S. economy added 104,000 jobs on a three-month average, and consumer spending remains solid, Kleinhenz said. Disposable income was up 5.1% year over year in October while employee compensation, a key measure of wages and salaries, increased 5.7%. Consumption was up 5.4% even as the personal saving rate grew to 4.4%.
Year-over-year inflation, as measured by the Federal Reserve’s preferred Personal Consumption Expenditures Price Index, rose to 2.3% in October from 2.1% in September. The Inflation rate had been on a downward trend through the year and remains close to the United States Federal Reserve target of 2%.
Kleinhenz pointed out consumers now see the economy as improving, citing consumer sentiment readings, and are supporting the retail sector with continued spending. Core retail sales, based on Census Bureau data but excluding automobile dealers, gasoline stations and restaurants, advanced 5.4% unadjusted in October year over year.
“Even though the traditional kickoff to the holiday season started with Black Friday, this holiday shopping season was already in full swing,” Kleinhenz said, noting many shoppers started earlier because a late Thanksgiving has left five fewer shopping days before Christmas than was the case in 2023. “Based on data seen so far, conditions are shaping up for a successful holiday retail season. U.S. economic growth remained strong in the third quarter, with gross domestic product expanding more than many estimates of the economy’s long-run potential capacity. Personal consumption continues to provide the horsepower behind the economy, as it has throughout this expansion.”
