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What Will Happen with Holiday Retail Sales?
With Thanksgiving in the rear-view mirror, many eyes turn to holiday shopping. Or, as Marcus & Millichap National Director of Research and Advisory Services John Chang noted: “It’s always a big question whether consumers will spend during the holidays. The results, of course, flow into retail property performance, but it has downstream impacts on industrial properties, self storage and even the housing market.”
In a recent Marcus & Millichap video, Chang discussed the following:
- The National Retail Federation (NRF) predicts retail gains between 2.5% and 3.5% (down from last year’s 3.9%).
- The International Council of Shopping Centers (ICSC) forecasts sales growth gains between 3% and 3.5%.
- Inflation-adjusted sales growth ranged between -.1% and .8% during the 2023 holiday season.
Meanwhile, Chang said he believes that holiday sales this year will exceed ICSC and NRF forecasts for the following reasons:
The job market. Chang said there are more jobs in the U.S. today than at any point in history. “As of October 2024, about 159 million people were employed,” he added. “That’s about seven and a half million more jobs than October of 2019, before the pandemic.
Hourly wages. Chang said that people are earning more. The average hourly wage is $35.46 as of October 2024, a 25.6% increase from October 2019.
Credit card debt. While credit card debt is $1.2 trillion, “when you consider how much wages have gone up, they’re not out of alignment,” Chang said. “Credit card debt as a percentage of income is about 4%, which is in alignment with where it was from 2012 to 2019.”
Household debt service payments. These payments as a share of disposable income stand at 11.5%. Chang said this is below the 11.8% average reported from 2012 to 2019.
Total savings. The total savings, including savings and money market accounts, increased by $4 trillion from the pandemic. “On an inflation-adjusted basis, that’s a gain of about 20%,” Chang said.
The above is the math. The real question is whether consumers are confident and want to spend. Chang pointed out that the recent election involved the economy. As such, “the election results suggest we may see a short-term boost in confidence levels,” Chang said. “If that happens, holiday retail sales could outperform expectations.”
- ◦People
- ◦Economy
