By Deborah Marie Sophia and Siddharth Kavale
(Reuters) – Holiday sales in the United States are projected to grow at the slowest pace in five years, according to a report released on Wednesday, as declining household savings and concerns over the economy push consumers to spend judiciously. Are.
According to Deloitte, sales at physical stores and online channels are expected to grow 3.5% to 4.6% between November and January, totaling $1.54 trillion to $1.56 trillion.
That compares with a 7.6% increase in 2022, Deloitte said, when high inflation pushed up the prices of everything from Christmas cardigans and toys to home appliances.
Last month, retail giant Walmart said it needed to be cautious about consumer sentiment in the back half of the year as student loan repayments, gas prices rising again and pressure from higher interest rates – The factors the company has said could make this happen. Put pressure on its profit margins.
Other earnings reports from retailers in August also dampened expectations for a strong holiday season, with department store leader Macy’s warning of cuts in consumer spending.
Pandemic-era savings are also depleting rapidly. America’s excess savings fell from about $2.1 trillion to about $500 billion in August 2021, according to San Francisco Federal Reserve estimates. Student loan payments are expected to resume for millions of Americans on October 1, putting further pressure on the budget.
Deloitte’s estimate is based on an inflation estimate of 3.6% for the year, compared with 7.1% last year.
However, it’s not all doom and gloom for holiday retail – according to Deloitte, online shopping is expected to be a bright spot this season, which saw growth between 10.3% and 12.8% compared to the past two years’ trends. Is.
U.S. retail sales also rose a better-than-expected 0.7% in July, driven by income growth and increased credit card use, according to the U.S. Commerce Department.
According to Deloitte’s US economic forecaster Daniel Bachman, holiday spending may be limited due to a slowdown in the job market.
DA Davidson analyst Michael Baker told Reuters that back-to-school trends have driven the direction of holiday sales in 23 of the last 29 years, and Walmart CEO Doug McMillon said in a conference call on Tuesday that He expects the holiday season to be “very good” given the demand for back-to-school merchandise in July.
Companies including Target and American Eagle Outfitters also said shoppers snapped up back-to-school items.
(Reporting by Deborah Sophia in Bengaluru; Additional reporting by Siddharth Kaivale in New York; Editing by Pooja Desai and Devika Shyamnath)
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