Three Surprises This Holiday Sales Season

David Reavill
4 min readNov 29, 2022
Holiday Shopping

Have you done your Christmas shopping yet? It always takes me a while to start going up and down the shopping aisles.

Paseo Nuevo in Santa Barbara is my favorite place to shop for the holidays. First, a cup of coffee from the Coffee Bean, then off to Nordstrom’s for those unique gifts, and if you can’t think of anything else, there’s always See’s Candies.

This year three surprising trends are emerging in our holiday shopping trends. As you know, we’ve just completed the four busiest shopping days of the year. It began with Black Friday, so named because this was the time that traditional retailers were supposed to turn a profit. Hence their red ink turned black. The extended weekend ended yesterday with Cyber Monday when those online retail shops offered special deals and hopefully raked in lots of sales.

The conventional view is that internet retail is the future trend, and everyone is going in that direction. Most assume that online sales are expanding rapidly and will soon outpace traditional brick-and-mortar stores if they haven’t already. But those online sales provide us with our first surprise of the season.

The reality is very different. Online shopping did have a big boost when the Covid Pandemic struck. Many preferred to stay at home rather than visit their favorite stores. Online shopping jumped in 2021 and 2022. But not this year. Online sales are projected only to increase about 1% over last year, increasing e-commerce sales to just 28% of the total. Or, to put that another way, three-quarters of us will prefer to shop at a traditional store where we can select our items right off the shelf.

And the 1% gain in online sales is far below the current inflation rate. It looks like the luster is coming off online shopping.

The second surprise from our Holiday Shopping is the minimal effect Covid had the last two years. Now, we’re far enough removed to see that Holiday sales increased substantially in the two years of Covid. In 2020, the first full year of Covid, Holiday Sales increased by over 9%. A very healthy increase indeed. And remember, 2020 was a year of meager inflation, so this is a pretty accurate reading on Holiday Sales.

But if 2020 was a pretty good year, 2021 was spectacular. Holiday Sales in 21 are up by over 13%. Outstanding. It was the year of the stimulus checks, which accounted for some spending. But all in all, two back-to-back excellent holiday sales years.

This year the National Retail Federation expects that Holiday Sales will hit a record, up 6 to 8% over last year. Ordinarily an excellent performance consistent with the 20-year history of Holiday Sales going back to 2002.

However, for 20 years, the country had little or no inflation, averaging roughly 2% annual inflation or less. This year’s inflation is currently climbing at better than 7%. So this year’s Holiday Sales gain will be approximately equal to inflation. Meaning retailers will be making little or no real, after inflation, profit.

In looking at holiday Sales, it is clear that Americans will continue to shop even when a pandemic strikes, and the retailers can survive even with escalating inflation.

However, there was one time when Holiday Sales dropped for the year. And that was during the 2008 Recession. Recessions are the one thing that can knock Holiday Sales for a loop. In 2008 Sales were down nearly 5%, the only time that has happened in the last 20 years.

If we use these, Holiday Sales as our chief measure of the economy. We are not in recession currently. But many on the Street, including yours truly, feel things will be very different next year at the Holidays.

Econ Briefs

Want to know the direction of the world’s financial markets? Just look at the Covid caseload coming out of China. Cases are down this morning, and global markets are all trading higher as investors look for a return online on the world’s manufacturing hub. Even in the US, markets are slated to open higher.

We are starting to see a real trend toward lower inflation rates. This morning Singapore and six of the German states have reported substantial reductions in inflation at the consumer level, while Brazil and Italy announced lower inflation at the producer level.

While later this evening, China will announce its latest inflation rate.

Here in the US, we will see a couple of reports on Real Estate prices. Most analysts expect home prices to decline.

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David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate