Conflicting Holiday Sales Outlook? Not Really

By at 2 November, 2022, 8:35 am


by Raymond J. Keating –

The calendar has turned the page from October to November. And if small businesses weren’t already thinking about holiday sales, well, they certainly are now, given the importance of the holiday season to the bottom line for the entire year.

What are some of the early takes on what this year’s Christmas season sales might bring to retailers? recently served up a sulky assessment of a sales slowdown that hit the stock price pretty hard. As reported by Reuters:

“In a call with reporters, Amazon Chief Financial Officer Brian Olsavsky said the company was bracing for slower economic growth. ‘We are seeing signs all around that, again, people’s budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues,’ he said. ‘We are preparing for what could be a slower growth period, like most companies.’”

Noting increased costs for consumers,’s sales projections came in below expectations. It also was noted, “Across the retail sector, U.S. online sales are expected to rise at their slowest pace in years this holiday season.”

At the same time, Gallup reported, “The amount Americans intend to spend on Christmas gifts this year is the highest Gallup has recorded in three years, since before the pandemic.” (See the following chart from Gallup.) Hmmm.

Well, don’t get too excited. The Gallup poll naturally is in nominal dollars. And when compared to pre-pandemic expectations, this year’s is about equal in nominal terms, and obviously less in real dollars. In fact, Gallup acknowledged:

“One reason Americans’ holiday spending estimate is especially high this year could be that consumers are expecting to pay more for goods like clothing, electronics and toys after a year of high inflation.”

There’s that nasty word: “Inflation,” again

Inflation raises costs for everyone – from consumers to manufacturers to service providers, including retailers. And keep in mind that most retailers are small businesses, with 98.4 percent of employer firms in the retail trade having fewer than 100 employees, according to the latest U.S. Census Bureau data. In addition, from those small retailers to and Wal-Mart, the goods being offered have been produced and/or transported via industries also overwhelmingly populated by smaller businesses.

Of course, it’s even worse than inflation alone. The U.S. is suffering through stagflation, that is, recession or slow growth combined with high inflation. Indeed, stagflation is the economic Grinch that can steal Christmas.

It would be nice if we had policymakers seriously working to counter inflation and drive economic growth. That would require a Federal Reserve to be focused on reining in its longtime excessive monetary growth and leaving interest rates to the market, and a White House and Congress zeroed in on pro-growth measures, that is, substantive and permanent tax and regulatory relief, as well as advancing free trade.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.


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