U.S. retail sales for holiday 2023 will grow between 3 percent and 4 percent over 2022 to between $957.3 billion and $966.6 billion, the National Retail Federation forecasts.

The forecast, which is for the Nov. 1 to Dec. 1 period, marks a return to pre-pandemic holiday spending levels from more heady spending in more recent years. The rate of the predicted increase marks a slowdown from last year’s 5.4 percent gain over 2021. Last year, holiday spending came to $930 billion, the NRF said.

Online and other non-store sales, which are included in the total, are expected to increase between 7 and 9 percent to a total of between $273.7 billion and $278.8 billion. That figure is up from $255.8 billion last year.

NRF’s forecast excludes autos, gas and restaurants, and does not factor in inflation and is based on economic modeling involving such indicators as employment, wages, consumer confidence, disposable income, consumer credit and previous retail sales.

Factoring in inflation of 3.5 to 3.8 percent indicates holiday sales could fall this year, or barely increase.

However, there are some potential wildcards that could change the forecast. As NRF indicated, holiday retail spending may experience residual effects from El Niño, depending on the strength and persistence of the weather phenomena. Also, warfare in the Middle East and Ukraine, politics, and the extent of COVID-19 and the flu could impact spending and the consumer psyche.

NRF’s forecast is pretty consistent with those of others. Mastercard has projected a 3.7 percent rise in 2023 holiday sales; software giant Adobe predicts online sales gains of 4.8 percent to $221.8 billion for the November-to-December stretch, and Salesforce has predicted holiday sales in the low- to midsingle-digit range.

Deloitte seems most bullish, with its research showing holiday spending surpassing pre-pandemic levels with consumers spending an average of $1,652, or 14 percent more than last year, while Customer Growth Partners’s prediction calls for a sluggish 2.1 percent year-over-year increase to $928 billion, up from $909 billion in 2022, suggesting the COVID-19 era’s “sugar high” wears off.

“Despite the uncertainty of the economy and challenges households are facing, we’ve seen strength and resilience across the consumer sector,” Matthew Shay, NRF’s president and chief executive officer, said during a media call Thursday. “Consumers continue to spend on household priorities, especially essentials,” Shay said, adding that he believes holiday spending increases are supported by wage growth and the nation’s low unemployment rate.

“Retail sales have grown year-over-year for 41 consecutive months — every month since May of 2020,” said Shay.

He also said that for first nine months of this year, sales are up 3.7 percent compared to the same period last year, and that pre-pandemic retail sales were growing at 3.6 percent annually.

However, Shay did say, “We all recognize there are some headwinds impacting consumers and will continue to play a role in the final months of this year.” Among the headwinds cited are rising credit balances, gas prices, interest rates and borrowing costs.

“We know in some categories of goods and some parts of our economy we see persistent inflationary pressures and are aware of other demands on household spending like student loan repayments,” Shay said.

“The threat of a government shutdown, decisions of policy makers and geo-political issues are on everyone’s minds; the cumulative effect of all of these things is going to show some moderation in consumer behavior relative to the last few years of holiday spending,” Shay said.

Citing NRF research, Shay said that 92 percent of adults plan to mark the winter holidays by shopping, celebrating, entertaining and spending money powering the economy, but they are looking for deals, discounts, and “finding ways to make the most out of monthly paychecks.”

Shay also noted that while NRF’s forecast is for the November through December period, “Consumers are getting an earlier start than ever” to holiday shopping. “We’ve seen that all the way back into the summer with different deals and promotions. Our research on consumers shows that 43 percent start browsing and buying before November. Gone are the days when the Friday after Thanksgiving was the kickoff. Four out of 10 are taking advantage of early deals in October.”

NRF’s holiday consumer survey, conducted by Prosper Insights & Analytics and separate from the holiday sales forecast, indicates Americans plan to spend $875, or $42 more than 2022, for the holiday, which is in line with holiday budgets over the past five years.

The retail trade organization estimated that between 350,000 and 450,000 seasonal workers will be hired, in line with seasonal hires last year of 390,000. Some hiring is happening earlier in the year, Shay said.

Jack Kleinhenz, NRF’s chief economist, said the U.S. economy is “holding together pretty well” despite consumers lacking confidence in it and having a bleak outlook for income due to inflation, borrowing costs, credit card costs and car loans. He also said inflation was coming down faster than expected, with the personal consumption pricing index at 3.4 percent currently versus 3.8 percent in the second quarter of this year.

“Retail seems to be normalizing on hirings and openings. The unemployment rate for retail workers is pretty low, bouncing around between 4 and 4.9 percent. Wages are growing as fast or faster than inflation in many cases.”

Kleinhenz said the leading categories for holiday are expected to be gift cards, followed by clothing and accessories, video games, and beauty, based on NRF’s consumer survey.

“Consumers remain in the driver’s seat, and are resilient despite headwinds of inflation, higher gas prices, stringent credit conditions and elevated interest rates,” Kleinhenz said. “We expect spending to continue through the end of the year on a range of items and experiences, but at a slower pace. Solid job and wage growth will be contributing factors this holiday season, and consumers will be looking for deals and discounts to stretch their dollars.

“For all that, the consumer has kept the economy afloat; the composition of spending from goods to services will also define holiday sales trends,” Kleinhenz said. “Service spending growth is strong and is growing faster than goods spending. The amount of spending on services is back in line with pre-pandemic trends.”

“Consumer confidence and sentiment at lower levels is not consistent to what the consumer is doing,” said Shay. “There is a disconnect between attitudes and actions. Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”