Holiday Spending 2024: Forecasters Predict Lower Growth in Sales This Year

High prices and a shorter season could put pressure on shoppers.

U.S. holiday spending is expected to increase this winter, but retail sales growth could be a little softer than recent years — especially compared to 2020 and 2021, when sales surged by 9.4% and 12.2%. Online and mobile sales will continue to see impressive gains, forecasters say. 

The heart of the shopping season is still weeks away, but several organizations have already released forecasts for end-of-year sales:

• Bain & Co. is predicting a 3% year-over-year increase in the United States, a step down from 4.4% and 4.2% growth in 2022 and 2023, respectively.
• The Mastercard Economics Institute expects a 3.2% increase, not counting auto sales, for sales between Nov. 1 and Dec. 24, compared to 3.5% last year.
• Deloitte says U.S. holiday retail sales could grow 2.3% to 3.3% between November and January. Last year, sales were up 4.3%, it said.
• Some organizations foresee slightly higher growth — for example, eMarketer thinks overall retail growth will hit 4.8% during the winter holidays.
• JLL, the real estate services company, says total spending — including but not limited to retail — could grow 31.7%. Gift budgets are expected to increase 9.9% year over year but will be a smaller share of overall spending at 46%. JLL says there will be bigger increases in food and decor (61%) and entertainment and experiences (56.4%).  

Let’s take a closer look at what retailers could expect from the last months of 2024. 

The forces behind this year’s holiday spending

A handful of factors might slow down shoppers this year.

• For starters, the traditional holiday shopping season will be shorter than normal because Thanksgiving will fall later in the month.
• The pace of inflation is less intense, but costs are still higher for many products.
• Because of the fall elections and political advertising, there’s more competition for TV spots, making them more expensive. Retailers could struggle to get their messages out. 

Will worries about the fall elections depress holiday spending? Probably not, the Boston Consulting Group reported. During the last two elections, consumer sentiment dipped for the losing side, but spending grew. 

Port workers conducted a short strike on the East and Gulf coasts, but many retailers already ordered holiday merchandise earlier than normal to avoid any disruptions. 

And there are a few reasons why holiday spending might increase. 

• The U.S. Federal Reserve recently cut interest rates, making credit card use more affordable. The Fed has two more opportunities to cut rates in early November and mid-December.
• Online sales are expected to grow by 8.4% to $240.8 billion, Adobe predicted. Mobile shopping alone could grow by 12.8% year over year. Bain & Co. predicted online and mobile growth of 9.5% versus 0.5% growth for in-store purchases. Deloitte foresees online growth of 7% to 9%, lower than last year’s 10%. 
• Shoppers have more disposable personal income, and even if hiring has cooled somewhat, the job market is relatively stable, Deloitte argued. 

Other predictions

Bain & Co. thinks clothing and accessories, along with groceries and general spending, will increase by 1% to 5% during the holiday season, while electronics and appliances will stay flat. Department stores, sporting goods, books, music and hobby categories could experience declines of 1% to 5%. Furniture and home furnishings could see spending drop more than 5%. 

The Mastercard Economics Institute, meanwhile, predicts lower interest rates will encourage shoppers to splurge on electronics. A lot of people bought devices during the pandemic, and some of those products could be reaching the end of their life. 

Adobe also thinks electronics — along with appliances and sporting goods — could see a spike in sales because of discounts that will run as large as 30%, similar to what was offered last year. Because of the shorter holiday season, discounts could be offered earlier than normal, the Mastercard Economics Institute reported.

The bottom line about holiday spending 2024

The fourth quarter can be an intense time for many companies, with greater pressure on cash flow. Plus, a new year and new demands for working capital are right around the corner. 

If your business needs access to more working capital as the year comes to a close, C2FO can help. Our industry-leading solutions make it possible for businesses to get paid faster on their receivables. Learn more about how C2FO works.