The anticipation of lower interest rates in 2024 could be feeding into consumers being willing to spend this holiday season. That’s according to data the National Retail Federation (NRF) revealed during the month of November.
Markets will be watching the interest rate moves of central banks intently before the end of the year. Thus far, the prevailing sentiment remains that rate cuts could happen as soon as the first quarter of 2024. That could be playing into the minds of consumers this holiday season. The CNBC/NRF Retail Monitor revealed strong sales for the month of November. Value shoppers have been coming out in full force even amid high inflation.
“November Retail Monitor data shows that consumers are embracing the holiday season and promotions being offered by retailers,” NRF President and CEO Matthew Shay said in a release. “Value conscious shoppers are out looking for deals as they purchase gifts for family and friends, and this data indicates that they’re finding them. Since November makes up half the holiday season, these numbers are a positive indication of what we can expect for the full holiday season.”
Bullish Vibes for Retail?
Before the release of November’s retail sales, the NRF was already anticipating that sales “will increase between 3% and 4% over 2022 to a record total of between $957.3 billion and $966.6 billion” between November 1 through December 31. That figure doesn’t include sales for automobiles, gas, and restaurants.
The CNBC/NRF Retail Monitor is still in its infancy given that it’s only the second month the metric has been used to provide month retail sales data. The difference between the monitor versus the Census Bureau is it actually uses credit and debit card purchase data (compiled by Affinity) as opposed to surveys.
The strong November retail sales month could be an early indication that the holiday shopping season may come out stronger than anticipated. Positive comments from the U.S. Federal Reserve this month might increase consumer confidence heading into 2024.
Given the recent data, traders who get bullish vibes from the retail sector could opt to use the Direxion Daily Retail Bull 3X ETF (RETL), which seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index. The index is a subset of the Russell 1000 Index, which measures the performance of the securities classified in the financial services sector of the large-cap U.S. equity market.
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