Wells Fargo Forecasts Modest Holiday Sales Growth

Wells Fargo analysts predict a 3.3% increase in holiday sales for November and December, indicating a weaker retail season to finish 2024.

This anticipated growth is below both last year's figures and the long-term average of 4.3%, reflecting changing consumer habits and economic considerations.

> "Consumers' purchasing power has once again become dependent on income growth, as unique pandemic-era spending sources have faded," noted Wells Fargo.

Retailers are now experiencing a slowdown in momentum that has fueled economic expansion in recent years. By September, the year-to-date sales growth for retailers included in Wells Fargo's holiday metric was the slowest seen in seven years.

Competition for consumer spending is intense, with both traditional and online retailers altering strategies to attract early and late shoppers. However, households are increasingly seeking value, which could restrict their spending.

> "With competition for consumers' dollars as fierce as ever, households are on the hunt for value this year and will likely spend less on traditional retail than in years past," the bank stated.

Despite the less optimistic holiday outlook, Wells Fargo accentuated the trend of year-round spending, alleviating concerns regarding the broader economic situation.

> "While we're expecting a more modest end to the year for retailers, the fact is consumers are spending more throughout the year instead of waiting for Christmas," the note added.

The 2024 retail season is expected to reflect a return to pre-pandemic norms. The analysts remarked, "There is also a scent of, dare-we-say, 'normal' in the air this year."

With the holiday shopping season commencing earlier than before, Wells Fargo's forecast indicates that spending in 2025 could remain stable, even if this year's retail performance is subdued.