Amid economic uncertainty, NRF forecast calls for a record retail holiday sales season

While every year brings new challenges, when it comes to logistics and the supply chain, that could be viewed as the understatement of 2025, due to various factors, including tariffs and trade policy, the ongoing emergence of AI, mixed signs regarding the state of the economy, and the ongoing federal government shutdown, among others. One could make the case that with all of these different balls in the air that it is hard to tell where things stand at this point in the game, so to speak. But with the calendar now into November, the game, from a logistics and supply chain perspective, is clearly focused on the holiday season, and by extension, the retail supply chain.

That was evident in the Washington, D.C.-based National Retail Federation’s (NRF) 2025 holiday forecast, which was issued today. NRF defines the holiday sales season as the period from November 1 through December 31.

For 2025, NRF said it is calling for total holiday season spending to come increase between 3.7%-to-4.2% annually, coming in between $1.01 trillion-to-$1.02 trillion. In 2024, holiday sales saw a 4.3% annual gain, to $976.1 billion.

NRF officials explained that the holiday forecast is based on economic modeling through a slew of economic indicators, including: consumer spending; disposable personal income; employment; wages; inflation; and previous monthly sales releases, while stripping out automobile dealers, gasoline stations, and restaurants.  

On a media conference call, NRF President and CEO Matthew Shay said that it is important to note that over the course of 2025, the American consuming public, the business community, and retailers have faced what he called heightened political and economic uncertainty in a number of categories, as it relates to what's happening with inflation, the impact of trade policies changing, stop and start again on tariffs, and the ongoing federal government shutdown. And he added that consumers’ attitudes and their sentiments, by historic standards, continue to be very low, even though they continue to spend and power the economy.

“They have the ability to do two things at once,” he said. “They have expressed very low sentiment, but yet they drive the economy forward with spending and aggressive participation in commerce. So that's an interesting feature, but it's been present, really, for the last five years, since, since we were in the lows of the pandemic.”

To that end, Shay pointed out that consumer spending currently accounts for more than 68% of U.S. GDP, its highest level in nearly 15 years, calling it a trend that NRF has seen change over the last few decades, as consumer behavior and consumption have continued to play a greater role in GDP. As an example, he cited how retail sales are up 5.1% year-to-date through September, which he admitted was surprising, given where it was thought things may end up in April, when the White House rolled out its reciprocal tariffs.

That growth, he explained, is attributable to various things, including retailers working to avoid passing on price increases to customers, pulling-forward of inventories ahead of tariffs kicking in, among other factors. And with the holiday sales season now here, it comes at a time in which consumers are being much more price-sensitive and also have adjusted their spending on a month-to-month basis.

“We know they are thinking about things much more deliberately and trading down, looking for less expensive options, trying to find value wherever they can find it,” he said. “And we know there's a great deal of price sensitivity, and so they are looking for less expensive options. And that has had implications for the [retail] industry, as it relates to the holiday season, we know that throughout the course of this year, spending on holidays, in particular, spending on loved ones, family and friends, really almost is sort of a category of spending that has a moat around it, and that's something we've also seen a trend, really, through the through the last four or five years since the pandemic.

NRF Chief Economist and Executive Director of Research Mark Matthews said on the call that the timing of the federal government shutdown is “absolutely problematic, in that it is causing a loss in private sector income, which, in turn, erodes consumer demand, with the caveat that spending is expected to recover when the shutdown eventually ends.

As a case in point, looking at the previous 35-day government shutdown, from December 22, 2018 to January 25, 2019, he said the overall impact to GDP was 0.2%, with a fair amount of that spending recovering.

While the NRF’s forecast may seem ambitious, as there has never before been a $1 trillion holiday sales season, that does not mean it may not come to fruition. For various reasons laid out in the forecast, it clearly could happen. Yes, things like tariffs and a somewhat shaky consumer environment could present obstacles, but for now, we will have to see what happens.