Kohl's is already preparing for matching-jammies season

For retailers, the holidays ahead are shaping up to be minimally merry. While U.S. consumers are feeling better about their finances, they are heading into the holiday season with higher levels of credit card debt. As a result, Deloitte expects holiday retail sales to grow and increase between 2.3% and 3.3%, reaching between $1.58 trillion and $1.59 trillion. And Bain & Company is predicting a similar increase at 3%.

Deloitte says that compares to the actual 4.3% growth in last season's November-through-January spendathon, when seasonally adjusted retail sales hit $1.49 trillion, excluding automotive and gas.

Deloitte also anticipates slower growth in ecommerce sales, with an increase of 7% to 9%, totaling between $289 billion and $294 billion this season. Last holiday season, internet shopping climbed 10.1%, to $252 billion.

While that marks the smallest gain in six years, Deloitte says it is still respectable and closer to "normal," as retailers put the pandemic-driven surges of recent years further behind them. For example, sales jumped 7.4% in the 2020 to 2021 holiday period and 13.5% in 2021 to 2022.

"We expect that healthy growth in disposable personal income, combined with a steady labor market, will support a solid holiday sales season," says Akrur Barua, an economist at Deloitte Insights, in the report.

He notes that cooling inflation is both a curse and a blessing, boosting people's purchasing power but depressing sales gains.

Deloitte also notes that credit card debt has risen, indicating that more shoppers have run through their savings. A new report from the Federal Reserve says credit card balances, at $1.14 trillion outstanding, are 5.8% above the level a year ago.

Bain & Company's forecast predicts a gain of 3% overall, with non-store sales rising 9.5%. That includes a prediction of flat sales for electronics and low-single-digit gains in apparel as consumers enter the holiday hoping to spend less and incur less debt.