NEW YORK -- Americans are expected to spend at a slower pace than last year during the crucial winter holidays, weighed down by sluggish wage growth and other factors, according to the nation's largest retail industry trade group.
The National Retail Federation, based in Washington, D.C., predicts holiday spending will be up 3.7 percent to $630.5 billion, slower than the 4.1 percent increase during last year's November-December period.
Weathering the storm
It would mark the first slowdown since 2012, when retailers were hurt by Super Storm Sandy, which disrupted households and businesses for months, as well as other distractions like a stalemate in Congress.
The dollar figure excludes sales from autos, gas and restaurants but includes online spending. The group estimates that online spending should be up 6 percent to 8 percent for the two-month period to as much as $105 billion. That would be in line with the 5.8 percent increase over last year's holiday season.
Still, the holiday sales estimate is much higher than the 10-year average of 2.5 percent. But the growth has been choppy since the deep downturn of 2008 when holiday sales fell 4.6 percent from the previous year.
"While economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend," said Matthew Shay, CEO and president of the National Retail Federation in a release. "The fact remains consumers still have the weight of the economy on their minds, further explaining the complex retail spending environment we are seeing right now."
For the first time, PricewaterhouseCoopers included spending on experiences like concert tickets and travel so it couldn't provide a year-ago dollar comparison. And PwC highlighted millennials, ages 25 to 35, estimated to spend 52 percent of their holiday spending on experiences. That compares with 24 percent for older shoppers.
The estimate is a barometer for retailers that depend on the last two months of the year, which on average, account for nearly 20 percent of annual retail industry sales. The figure also offers some insight into the mindset of the consumers, which make up to 70 percent of economic activity.
Based on a survey of 2,000 shoppers, it found those who make under $50,000 plan to spend an average of $681 for the holidays, less than a year ago. And those who make more than $50,000 a year said they plan to spend an average of $1,331, which is more than they did a year ago.
Stores are grappling with shoppers' shift from clothing and other traditional merchandise and more toward experiences like spas, concert tickets or big ticket necessities like cars.