US holiday sales set to top $1 trillion for the first time, NRF forecasts

By Neil J Kanatt

(Reuters) -U.S. holiday sales are expected to surpass $1 trillion for the first time, the National Retail Federation said on Thursday, though growth is forecast to slow as economic pressures weigh on consumer sentiment.

The holiday season includes major shopping days such as Thanksgiving, Black Friday, Cyber Monday and Christmas, and accounts for a significant portion of major retailers' revenues.

Persistent inflation, the fallout from the Trump administration's tariffs and the federal government shutdown pose risks, as shoppers think twice about buying extravagant gifts.

"American consumers may be cautious in sentiment, yet remain fundamentally strong," NRF CEO Matthew Shay said.

NRF chief economist Mark Mathews said lower-income consumers are shifting toward essentials.

"More of the non-essentials that they're cutting out are in the services side of the economy, like recreation, travel, and eating out. They're not doing that, but they're continuing to spend on goods."

The economic stress on spending had led to multiple forecasts of a subdued holiday shopping season this year?as well as muted forecasts for the period from companies including Tapestry, Under Armour (UAA) and Canada Goose on Thursday.

"Consumers are highly promotional right now. They're looking for deals," Mathews told Reuters.

"Most retailers recognize that," he added, saying companies will take a hit to stay competitive in the market.

Sales during November and December are projected to rise between 3.7% and 4.2% to $1.01 trillion-$1.02 trillion, compared with a 4.3% increase to $976.1 billion last year.

Retailers are expected to hire between 265,000 and 365,000 seasonal workers, down from 442,000 last year, reflecting a softer labor market, NRF said.

NRF's forecast is based on economic modeling using indicators such as consumer spending, employment, wages and historical retail data. It excludes auto, gas and restaurant sales.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Anil D'Silva and Pooja Desai)