NEW YORK – Americans are expected to spend at a faster clip than last year for the critical holiday season, helped by an economy that should only continue to pick up, according to the nation’s largest retail industry trade group.
The National Retail Federation, based in Washington, D.C., is forecasting holiday sales for the November and December period to rise 3.6 percent to $655.8 billion, much better than the 3 percent growth seen in the year-ago period.
The figure also is much higher than the 10-year average of 2.5 percent and above the 3.4 percent growth seen since the recovery began in 2009. The dollar figure excludes sales from autos, gas and restaurants but includes online spending and other non-store sales. The group estimates that nonstore sales should rise 7 percent to 10 percent to as much as $117 billion.
The retail trade group President and CEO Matthew Shay noted that this year has had some rocky moments like an unseasonably warm fall, but he said all the fundamentals are in place.
“Our forecast reflects the very realistic steady momentum of the economy and industry expectations,” he said. “We remain optimistic that the pace of economic activity will pick up in the near term.”
The figure is a measure for retailers who depend on the last two months of the year. Holiday sales account for nearly 20 percent of annual retail industry sales. It also offers a snapshot of the mindset of the shopper.
One encouraging area: the job market. Government figures show that 2.5 million more Americans have jobs as of August compared to a year earlier. The unemployment rate is 4.9 percent, lower than the 5.1 percent rate a year ago. And a report from the Census Bureau that was released last month showed that U.S. households got a raise last year after seven years of sluggish incomes. Increasing pay also boosted the poorest households, slashing poverty by the sharpest amount in nearly a half a century. The median U.S. household’s income rose 5.2 percent in 2015 to an inflation-adjusted level of $56,516, according to the Census. That marks the largest one-year gain on data dating back to 1967. It’s up 7.3 percent from 2012, when incomes declined to a 17-year-low.
Given the tight labor market, retailers are even dangling perks like higher pay, extra discounts and more flexible schedules to lure temporary holiday workers. Still, while the overall number of jobs for seasonal workers looks to be flat this year, the biggest growth area in recent years has been in transportation and warehouse jobs because of the rise in online shopping.
The government is scheduled to release September job numbers on Friday.
Shoppers also are enjoying lower food prices at the grocery store, which offer relief to those living from paycheck to paycheck
The National Retail Federation warned that geopolitical uncertainty, the presidential election and unseasonably warm weather could hurt shopping patterns. Last year, for example, major stores like Macy’s had to aggressively discount coats and boots after mild temperatures lingered into December because shoppers didn’t have a need to buy heavy winter apparel. That hurt holiday sales. In fact, the National Retail Federation’s original forecast was for a 3.7 percent increase.
Still, as Jack Kleinhenz, the group’s economist noted, “The economic spending power of the consumer is resilient and it should never be underestimated.”
