Thought of the Week
While holiday spending is projected by the National Retail Federation to hit a record high, sales growth, as shown by the chart of the week, is expected to fall slightly below the pre-pandemic average of 3.6%. However, this moderation reflects easing inflation rather than weakening demand. In fact, when adjusted for inflation, real sales are set to exceed last year, buoyed by record shopper turnout and an anticipated rise in per-person spending to around $900. Driving this is real wage growth, which has remained positive for a year and a half. Furthermore, stock market gains and recent Fed rate cuts have lifted consumer confidence. That said, elevated prices, along with the depletion of pandemic-era savings cushions, may cap spending growth for some households.
Retailers, for whom the holiday season drives a disproportionate share of annual sales, face a mixed outlook. Deal-hunting consumers are turning to discount retailers, boosting revenue and profit forecasts. Conversely, those reliant on discretionary categories like apparel and specialty goods are seeing softer demand as shoppers focus on essentials.
Despite challenges, this season reflects a broader economic trend: slowing but not stalling. As winter sets in, consumer spending is cooling but remains far from frosty—underscoring the resilience of the U.S. economy as we head into 2025.
The week in review
- Housing starts declined 3.1% m/m
- Initial claims declined to 213K, a 7-month low
The week ahead
- House price index
- 2nd est. of 3Q24 GDP
- FOMC minutes
Chart of the Week: Source: National Retail Federation, J.P. Morgan
Asset Management. NRF expects 2024 holiday season sales growth
between 2.5%-3.5%.
Thought of the week: Source: National Retail Federation, J.P. Morgan
Asset Management.
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Originally Posted November 25, 2024 – Weekly Market Recap
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