Christmas 2020: Shoppers expected to spend more, but COVID-19 remains the wild card

Charisse Jones, USA TODAY
·2 min read

Retailers expect a robust holiday shopping season this year, buoyed by a strong housing market, increased savings and cheaper gas – though the uncertainties of the coronavirus could put a chill on buying.

From the start of November through the end of the year, sales are forecast to grow 3.6% to 5.2% compared with the holiday season in 2019, according to the National Retail Federation. That amounts to $755.3 billion to $767 billion in spending.

“We know we’ve got momentum as we head into the season,” NRF CEO Matthew Shay said in a call announcing the group's forecast. “We’ve seen consumers very, very engaged, looking for opportunities to celebrate.”

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But the upbeat outlook highlights economic disparities laid bare by the COVID-19 pandemic.

On the one hand, the expected shopping uptick is likely to be fueled by Americans who have extra money because of federal relief checks received at the start of the global health crisis, lower gas prices and less overall spending because the coronavirus largely confined them to their homes.

Some Americans may have extra money for holiday shopping.
Some Americans may have extra money for holiday shopping.

“These are positive factors that will influence the ability to spend,” Jack Kleinhenz, NRF's chief economist, said.

Homeowners may feel more comfortable spending cash as housing prices soar, lifted by buyers eager to take advantage of historically low interest rates and jockeying to purchase one of the limited number of homes on the market.

On the other hand, millions of Americans remain out of work as the economy slowly recovers from a downturn sparked by the shutdowns implemented to slow the spread of the virus.

“Certainly … there are millions of Americans that continue to need support,” Shay said, adding that the relief checks and increased unemployment benefits offered earlier in the year were “a real lifeline for American families and for workers.”

The pandemic also remains a wild card.

“The prospect of not only widely distributed and highly effective vaccines but also the increased progress on therapeutics ... are all having an impact on consumer confidence,” Shay said.

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The virus is surging throughout the country, prompting some lawmakers to impose new restrictions.

“This can pump the brakes on momentum and have a consequence (on) spending,” Kleinhenz said. “Rising cases and tighter restrictions could set recovery in reverse.”

Follow Charisse Jones on Twitter @charissejones

This article originally appeared on USA TODAY: Holiday sales expected to rise, but COVID-19 surge, vaccine may decide