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Retail Spending Expected to Rise as Much as 4% This Holiday Season

October 3, 2017, 4:03 PM UTC

Looks like U.S. retailers can look forward to a holly, jolly Christmas period this year, as shoppers are likely to find themselves in the mood to spend more than in 2016.

The National Retail Federation gave its annual holiday season spending forecast on Tuesday. It expects sales to rise between 3.6% and 4%, helped by improving consumer confidence as well as an extra between Thanksgiving and Christmas (which falls on Monday this year) compared to last year.

The NRF expects sales, excluding cars, gas and eating at restaurants, in November and December to generate between $678.75 billion and $682 billion. The trade group said it was giving a forecast range, rather than the standard fixed percentage, due to the uncertainty around consumer spending caused by recent hurricanes, which have battered Houston, Tampa areas, and Puerto Rico.

The NRF is expecting another big year for online sales: so-called non-store sales, which include catalogs and kiosks as well as e-commerce, should rise 11% to 15%, according to the forecast.

The stars have aligned in favor of customer spending this year, setting up conditions that will likely foster ample shopping, the NRF said. “The combination of job creation, improved wages, tame inflation and an increase in net worth all provide the capacity and the confidence to spend,” said NRF Chief Economist Jack Kleinhenz.

A number of large retailers, including Macy’s (M), Kohl’s (KSS) and J.C. Penney (JCP) could use a strong holiday season after sluggish business at the start of the year. And the holidays provide them with the opportunity to recover some lost sales: according to the NRF, department stores get 23.7% of annual sales in November and December alone. Jewelers such as Signet (SIG) and Tiffany & Co (TIF) are also very reliant on the holidays.

The NRF’s forecast is similar to those issued in recent weeks by others: consulting firm Deloitte and AlixPartner have each anticipated holiday season sales growth around 3.8% to 4.5% this year.