The National Retail Federation forecasts U.S. holiday sales will grow 4.2% in November and December, reaching $1.01 trillion. Nearly half of that gain reflects price inflation rather than real consumer spending growth. For apparel brands, the headline number demands a discount on its face value.

Last year, holiday sales rose 3.1% to $972 billion, according to NRF. The new forecast, produced with Oxford Economics, draws on real disposable income, labor market data, unemployment, wages, household wealth, inflation and year-to-date sales patterns. It excludes auto dealers, gas stations and restaurants.

What does the 4.2% actually contain?

NRF President and CEO Matthew Shay framed the consumer as resilient. On a Thursday conference call he said: "We continue to be very impressed with the resilience that consumers have demonstrated, as they continue to spend and power our economy." He added that households face persistent inflation and uneven confidence, yet holiday spending on loved ones remains a priority.

The caveat sits in the composition. If roughly half the nominal growth is inflation, real unit demand is growing closer to 2%. That gap matters for inventory planning, factory order depth and markdown budgets. Sourcing teams reading 4.2% as volume risk over-ordering into a market where price, not units, drives the gain.

Who pays for the discounting?

Mathews, NRF's chief financial officer (note: the source gives this title), confirmed inflation is built into the nominal forecast. He expects core goods inflation, measured by the Personal Consumption Expenditures (PCE) price index, to hit 2.5% in 2026, against 1.6% in 2025. Core goods excludes food and energy. The 2026 average PCE rate so far sits at 2.95%. Overall U.S. inflation stood at 3.7% in September.

"There's no doubt inflation is contributing to our nominal sales growth forecast," Mathews said. He also flagged a widening split: higher gas and food prices weigh on moderate-income households, while rising financial wealth supports higher-income spending, with the strongest wealth effects outside core retail — in autos, travel and hospitality.

Discounting is expected at or near historic highs. Retailers know consumers are squeezed by prices. Vendors and factories should expect margin pressure transmitted down the chain: deeper concessions, tighter delivery windows and later replenishment orders as brands hold open-to-buy.

How does the seasonal hiring picture look?

Shay described a "low hire, low fire" labor market. Retailers are expected to onboard 325,000 to 375,000 seasonal workers, roughly in line with last year's 356,000. Flat hiring signals flat expected fulfillment volume — another signal that nominal growth overstates unit demand.

How do rival forecasts compare?

The spread among forecasters is itself data:

• Bain & Co.: holiday sales up 4.5%, surpassing $1 trillion; nonstore sales up 9%, in-store up 2.5%.
• Mastercard (excluding auto and gas): up 5.5%; stores up 3.6%; online up 11%.
• Deloitte: U.S. holiday e-commerce of $316.1 billion to $318.9 billion for November 2026 through January 2027, up 7.5% to 8.4%; total retail up 4% to 4.8% to about $1.7 trillion.
• Adobe: U.S. online sales up 6.7% to $275.1 billion.

Every forecast shows online growing two to three times faster than stores. That divergence shifts cost structures — more packaging, returns logistics and last-mile spend — even when total volume barely moves.

What signals demand timing and mix?

Holiday shopping started earlier than last year, triggered by Amazon Prime Days on Oct. 6-7, one day earlier than in 2024. An earlier start compresses the traditional December peak and rewards vendors who can ship earlier.

Apparel ranks high on gift lists, lifted by fit-driven replacement demand tied to widening GLP-1 drug use, back-to-office purchases such as cashmere sweaters and wool coats, and Gen Z-led mall traffic gains. AI use is rising on both sides: consumers deploy it for product discovery and price comparison, while retailers use it to cut costs and gain efficiency — a margin lever that may matter more than demand itself in a half-inflationary growth year.

NRF's consumer confidence measure hit all-time lows this season, yet Mathews called confidence "a pretty poor predictor of actual spending," pointing instead to real disposable income, the labor market and household wealth. Brands should treat the $1.01 trillion as a pricing story first and a volume story second until hard sell-through data arrives in January.