A woman carries shopping bags during the holiday season in New York
Growth in holiday sales will slow to pre-pandemic levels. Reuters

Spending by American consumers this holiday season will reach an all-time high. But the rate of increase is expected to be smaller than in the previous three years.

The findings are in an annual survey by the National Retail Federation, the world's largest retail trade association.

Consumers will spend a total of $957.3 billion to $966.6 billion in November and December, which would represent an year-over-year increase of 3% to 4%, the NRT forecasts.

Sales for the period rose 5.4% in 2022, 12.7% in 2021 and 9.1% in 2020.

"It is not surprising to see holiday sales growth returning to pre-pandemic levels," NRF President and Chief Executive Officer Matthew Shay said in a statement. "Overall household finances remain in good shape and will continue to support the consumer's ability to spend."

Holiday sales had an average growth of 3.6% from 2010 to 2019.

Search for Discounts

NRF sees a more careful consumer this year amid inflation, tighter credit and higher interest rates.

"We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace," NRF Chief Economist Jack Kleinhenz said. "Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars."

NRF estimates that online shopping will grow at a faster rate: 7% to 9%, to a range of $273.7 billion to $278.8 billion.

Retailers will hire between 345,000 and 450,000 workers to meet the increased demand during the holiday season. Last year, the industry added 391,000 jobs for the period.

Consumer Spending

An employee walks in the aisles of Mary Arnold Toys in New York on August 2, 2021; co-owner Judy Ishayik is urging customers to shop for Christmas as early as September due to Covid-linked supply snags
Mastercard and Deloitte also see higher holiday sales and spending AFP / Kena Betancur

Separate surveys conducted by Deloitte and Mastercard showed that U.S. consumers plan to increase spending this holiday season.

Mastercard, which analyzed overall retail sales, forecasts a 3.7% gain, in line with NRF's estimate.

Deloitte's survey looked into individual costs and predicts consumers will spend on average $1,652, or 14% more than last year.

The American economy more than doubled its pace of expansion in the third quarter to an annual rate of 4.9%, sustained by consumer spending. Economists say U.S. growth should slow in the fourth quarter as the labor market becomes less heated and because of the impact of high interest rates.