solid real gains versus the prior year (adjusted for inflation). We’re expecting a context of 0-1 percent retail-specific inflation. More negative retail inflation could depress the rate of growth in value sales. Last year, we saw an average of 3.2 percent growth for the fourth quarter. Our estimates are benchmarked to Census Bureau data for total retail sales, excluding automobiles and gasoline. US consumers are continuing to expand their retail spending: In dollar terms, year-to-date retail sales growth has averaged 3.5 percent (through May 2024). This is in the context of substantial declines in retail-specific inflation and equates to positive real growth in total retail sales. However, these uplifts are being distributed selectively and unevenly. Amid a sluggish housing market and pressured budgets, big-ticket categories have tended to perform the weakest, although categories such as home improvement and large furniture items are not traditional holiday gifting categories. This year, consumers have increased their spending on apparel (a key holiday gifting category), with growth ahead of inflation reflecting increases in real spending. What consumers say Each quarter, Coresight Research surveys US consumers on their holiday spending expectations. In our latest holiday survey, the proportion of US consumers who reported expectations to spend more on the holidays than last year was greater than the proportion that expected to spend less than last year – 28.6 percent to 25.7 percent, respectively, as of June 10 this year. The split is very similar to when we asked consumers about their holiday 2023 expectations in June last year. Despite that relative optimism in spending expectations, the share of consumers expecting their personal financial situation to be better for the forthcoming holiday season than one year earlier has weakened since we asked in January and is lower than when we asked in June last year. By a small percentage, more consumers expect worse finances than expect better finances, as of June this year. Dovetailing with the increased pessimism in our holiday-specific surveys, Coresight Research weekly surveys find consumer sentiment variable but generally weak and having been on a downward trend after the end of January. We perceive the slower-than-expected unwinding of both inflation and interest rates to be dampening sentiment. A mixed macro picture The consumer economy continues to show mixed indicators. Wages are rising above inflation, although the labor market is showing a very gradual softening and interest rates remain a pressure for many. Consumers are borrowing more and saving less to make budgets stretch. Average mortgage rates have recently eased but the Federal Reserve, at the time of this writing, has yet to lower interest rates and in mid-June, the Fed signaled that there may be just one interest rate cut this year. Inflation remains a drag on consumer sentiment and spending power, and disinflation has generally been more prominent in retail categories than at a total level, which means value growth in retail sales is in many cases reflecting stronger real growth. In a tailwind for holiday spending, gasoline prices are forecast to fall in the remainder of the year. Inflation continues to shape consumer behavior At Coresight Research, we regularly ask inflation-aware consumers whether they are taking actions to mitigate price rises when they are shopping for non-grocery products and the large majority of them are doing so. The most popular action in non-grocery shopping is simply buying fewer items (46.0 percent of respondents as of June 3, 2024) followed by seeking out promotions, discounts or coupons (40.7 percent). Even so, the proportion that said they are not taking any action increased to 19.0 percent in our latest survey, reflecting the moderation of inflation in retailing. Should inflation rates continue to ease, we could see some moderation of these kinds of price-conscious activities. but we expect many consumers to carry these kinds of behaviors into the holiday season. We expect October promotional events, such as Big Deal Days offered by Amazon, to resonate with consumers, with October timing encouraging the pull-forward of demand. A narrower holiday calendar The traditional holiday calendar, as measured from Thanksgiving, is much narrower this year, with 24 days between Thanksgiving and Christmas Day, versus 31 days last year. At the same time, holiday shopping has crept earlier in recent years, and that traditional post-Thanksgiving kickoff has become diluted. The later timing of Black Friday and Cyber Monday suggests a greater likelihood that consumers will have started shopping prior to these dates. About 61 percent of holiday shoppers surveyed by Coresight Research tend to start holiday shopping early. With Christmas Day falling on a Wednesday, Super Saturday falls a comfortable few days beforehand versus a Monday Christmas Day last year. That added breathing space suggests that a greater proportion of consumers than last year will be comfortable leaving some shopping until Super Saturday. What we think We expected this to be a transition year, from a weaker, inflation-impacted economy to greater resilience amid low inflation and reduced interest rates. However, that transition is proving slower than initially expected. Until recently, overall inflation has stuck at above 3 percent and cuts to interest rates have been delayed. Constrained consumers are still spending in retail, but selectively. In apparel and footwear – a key holiday category–growth in consumer spending and retail sales has generally been above inflation so far this year. And, in this category, we are seeing selective spending in action: We exited the latest earnings season with outperformers including casualwear, featuring brands such as Skechers, Crocs and Hoka, while those more challenged in growing their top lines in the latest quarter included names in the childrenswear, innerwear, denim and traditional sportswear spaces (such as Adidas and Nike). We expect price-competitive offerings to continue to appeal across the income spectrum but to see the greatest incremental appeal among lower-income shoppers, given that group’s greater pessimism, and because lower-income consumers have tended to show the greatest effects from recent macroeconomic shocks. We expect to see a sustained consumer appetite for promotions. Amazon has now created an effective second Prime Day each October, and we expect these kinds of events to resonate with consumers, with the October timing encouraging the pull-forward of demand and likely affecting traditional days such as Black Friday and Cyber Monday. This year, those traditional events will fall later on the calendar, providing further opportunity for October events to steal their thunder. Major retailers, including those in more challenged spaces, such as the middle ground of retail, should consider the opportunities to offer earlier sales events rather than leaning solely on Black Friday and Cyber Monday. Newer, low-price names Shein and Temu are likely to continue to make inroads. Coresight Research data shows about one in six surveyed consumers are shopping on Temu and about one in 11 are shopping on Shein every two weeks. TikTok is likely to be a more meaningful sales channel, especially in beauty. In a price-sensitive context and one in which consumers are exploring new sales channels, other marketplaces connecting shoppers with low-price sellers, including cross-border sellers, are likely to resonate with consumers, too.