2020 Holiday Season: One for the Record Books

"Household emotions likely played into holiday economic decisions."

NRF Chief Economist Jack Kleinhenz

WASHINGTON – Record holiday season retail sales during the last two months of 2020 reflected the recovering economy but also got a boost from consumer emotions after a stressful year, National Retail Federation Chief Economist Jack Kleinhenz said today.

“This was not a typical holiday season and it took place amid an unprecedented shopping landscape,” Kleinhenz said.  “When we assembled our 2020 holiday forecast, we knew one scenario was that results could come in high and that sales might exceed the forecast.”

Kleinhenz said there was a “push and pull” between excitement over the holidays and worries over a resurgence in COVID-19 cases. But consumers’ ability to spend was boosted by government stimulus checks received earlier in the year and money saved by not traveling, dining out or attending entertainment events. Rising home values and stock prices also provided support for holiday spending while the availability of COVID-19 vaccines helped ease worries over the virus and state restrictions on activity. Nonetheless, millions of Americans remained out of work and others were working fewer hours.

Kleinhenz cited English economist John Maynard Keynes’ observation that consumer behavior can sometimes be governed by “animal spirits” rather than rational motivation, resulting in fluctuations in the economy.

“Household emotions likely played into holiday economic decisions as consumers wanting to offset the anxiety and stress experienced during 2020 spent on gifts to enjoy a better-than-normal holiday,” Kleinhenz said. “This was clearly a year when animal spirits outweighed conventional wisdom.”

Kleinhenz’s remarks came in the February issue of NRF’s Monthly Economic Review, which said 2020’s $789.4 billion in holiday spending during November and December was the highest on record despite the coronavirus pandemic. The season’s 8.3 percent growth over the same period a year earlier was the highest holiday growth rate in records going back to 2002 – beating 6.8 percent in 2004 – and more than double the 3.5 percent average of the previous five years, including 2019’s 4 percent gain.

The results easily exceeded NRF’s holiday forecast, which cited economic indicators such as growing employment and wages to predict that holiday sales would increase between 3.6 percent and 5.2 percent over 2019 to between $755.3 billion and $766.7 billion. The numbers exclude automobile dealers, gasoline stations and restaurants to focus on core retail.

The holiday spending total includes online and other non-store sales, which were up 23.9 percent at $209 billion as consumers shopped more online whether they made their purchases from pureplay online sellers or traditional retailers’ websites. That compared with 14.7 percent growth in 2019 and represented 26.5 percent of total sales during the holiday season.

Kleinhenz called online holiday sales “a standout” that showed how retailers had innovated during the pandemic. Even as it became too late for reliable delivery of online orders in late December, many consumers still ordered online but took advantage of in-store and curbside pickup services retailers had perfected over the previous several months.

About NRF
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $3.9 trillion to annual GDP and supporting one in four U.S. jobs – 52 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring and communicating the powerful impact retail has on local communities and global economies.