Financial Health
November 24, 2015

Holiday sales: ‘A little more purchasing power for the consumer’

Economist Michael Brown answers questions about the recently released Wells Fargo Securities 2015 Holiday Sales Outlook.

The Wells Fargo Securities Economics Group recently released its 2015 Holiday Sales Outlook. We asked one of the authors, Economist Michael Brown, about the report.

Q: What are the key takeaways of the outlook?

Michael Brown

The overarching theme is we continue to expect consumer spending to remain fairly robust, but probably not as spectacular as last year. We should see growth in holiday sales1 of 3.4 percent, which is lower than the 4.1 percent pace from 2014. The difference is mostly because of lower inflation and not because of decreased demand.

Q: Why are holiday sales important to the economy?

Approximately 70 percent of the economy is driven by consumers and holiday sales are not only a fundamental component to overall economic growth, but they also have the potential to affect monetary policy and interest rates as we go forward.

The expected holiday spending per person, expected holiday sales, and the prices for select holiday goods in 2015.

Q: What factors influence holiday sales?

The biggest factor that influences holiday sales is consumer confidence. Psychologically, consumers are feeling a lot better about the outlook for the economy this year. The unemployment rate has come down from last year, and we’re finally starting to see more full-time job growth and income growth.

Q: So the outlook is positive, but at a slower pace from last year?

Prices aren’t rising as fast as they were this time last year, so that translates to a slower pace of holiday sales, since some prices are down. When we think about apparel, big ticket items like TVs, other electronics – a lot of those prices are lower than last year. The byproduct of that is consumers are going to have a little more discretionary income.

With that said, we’re probably looking at close to the real inflation adjusted rates of growth that we saw this time last year.

Q: How does inflation affect holiday sales?

When I think about traditional holiday gift giving, I think of apparel, electronics, sporting goods – and prices of those items are down on a year-over-year basis. That means a little more purchasing power for the consumer.

Q: Why are prices down?

One reason is that a lot of consumer goods are imported, and with the strong U.S. dollar, those goods are less expensive as a result.

Q: Can you discuss the effect of the online shopping trend?

The National Federation of Retailers survey found that 46 percent of consumers2 are going to shop online this year, which is up markedly over the last five years. There’s certainly a dominant trend towards more e-commerce transactions and less in the store retail activity.

Q: What do you expect for holiday sales volume and spending?

The volume of sales will be comparable to last year, and maybe even a little better in real terms. But when you’re looking at things like profitability for retailers, the actual dollar amount spent per consumer, those are going to rise at a much slower pace than they did last year. The National Retail Federation’s annual survey predicts that the average holiday shopper will spend $805.65 compared with $802.45 last year.3

Q: What about the outlook for other types of retail sales that aren’t included in the Holiday Sales Outlook?

Auto sales aren’t included in the holiday sales forecast, but we’ve seen very strong auto sales numbers so far this year. We expect that momentum to be maintained. So while it’s not included in holiday sales, it’s certainly another dominant trend driving consumer spending.

Other reports are available at

1We define holiday sales in accordance with the National Retail Federation’s definition of nominal retail sales less sales at automotive dealers, gas stations and restaurants for November and December.

2National Retail Federation. (2015). “Retailers in for a very digital Holiday Season, According to NRF Survey.”

3National Retail Federation. (2015). Holiday Trends and Expectations: NRF’s 2015 Holiday Survival Kit.


Wells Fargo Securities Economics Group publications are produced by Wells Fargo Securities, LLC, a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission, the Financial Industry Regulatory Authority, and the Securities Investor Protection Corp.

The information and opinions herein are for general information use only. Wells Fargo Securities, LLC does not guarantee their accuracy or completeness, nor does Wells Fargo Securities, LLC assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. Wells Fargo Securities, LLC is a separate legal entity and distinct from affiliated banks and is a wholly owned subsidiary of Wells Fargo & Company.

© 2015 Wells Fargo Securities, LLC.