Investing.com -- Wells Fargo analysts are forecasting a modest 3.3% increase in holiday sales this November and December, predicting a weaker-than-usual retail season to close out 2024.
This projected growth falls short of both last year's sales figures and the long-term average of 4.3%, reflecting shifting consumer habits and economic factors.
"Consumers' purchasing power has once again become dependent on income growth, as unique pandemic-era spending sources have faded," Wells Fargo noted.
Retailers are said to be facing a slowdown in momentum that has driven economic expansion in recent years.
Through September, retailers included in Wells Fargo's holiday metric reported the slowest year-to-date sales growth in seven years.
Competition for consumer dollars remains fierce, with both traditional and online retailers adjusting their strategies to accommodate early and late shoppers.
However, Wells Fargo says households are increasingly on the lookout for value, which is likely to limit spending.
"With competition for consumers' dollars as fierce as ever, households are on the hunt for value this year and will likely spend less on traditional retail than in years past," the bank wrote.
Despite this weaker holiday outlook, Wells Fargo emphasized that the trend of spreading spending throughout the year, rather than concentrating it around the holidays, could reduce concerns about broader economic health.
"While we're expecting a more modest end to the year for retailers, the fact is consumers are spending more throughout the year instead of waiting for Christmas," the note added.
The 2024 retail season is also said to reflect a return to pre-pandemic dynamics. "There is also a scent of, dare-we-say, 'normal' in the air this year," the analysts observed.
With the holiday shopping season kicking off earlier than ever, Wells Fargo's forecast suggests that 2025 spending could remain stable even if this year's retail finish is soft.